Investor confidence doesn’t happen by accident or luck. It’s built through consistent demonstration of transparency, accountability, and robust internal controls. One of the most powerful tools your organization can leverage to foster this confidence is third-party attestation services. 

These independent validations serve as a bridge between your company’s internal assertions and external stakeholder trust, providing the objective assurance that investors, lenders, and business partners increasingly demand. 

The foundation of trust in modern business 

Your stakeholders are operating in an environment where trust is both precious and fragile. High-profile corporate failures and financial scandals have made investors more cautious about where they place their confidence—and their capital. This heightened scrutiny isn’t just reserved for public companies; private enterprises seeking investment, loans, or strategic partnerships face similar expectations for transparency and accountability. 

Third-party attestations address this trust gap by providing independent verification that your organization has established mature internal controls and operates with the transparency stakeholders expect. Rather than relying solely on management’s representations, these services offer objective validation from qualified professionals who have no vested interest in your company’s outcomes. 

Understanding the attestation landscape 

The most familiar form of third-party attestation is the financial statement audit. Financial audits provide a third-party opinion on financial statement accuracy and integrity, offering invaluable insight to help you make the right decisions for impactful change and support company growth. 

Beyond financial statement audits, reviews and compilations offer different levels of assurance depending on your needs: 

• Reviews offer limited assurance through analytical procedures and inquiries, suitable when full audit rigor isn’t necessary

• Compilations present financial information in proper format without providing assurance, often appropriate for smaller businesses

System and Organization Controls (SOC) reporting 

SOC reports instill trust and assurance to customers, investors, and stakeholders that companies have effective controls and processes in place to protect their data and comply with regulatory requirements. These reports have become increasingly valuable as businesses rely more heavily on technology and outsourced services and mandate these type of reports as part of their new vendor or partnership due diligence process.  

SOC 1 reports focus on internal controls relevant to financial reporting, particularly valuable when your organization provides services that impact your clients’ financial statements. By providing a SOC 1 report, companies can effectively communicate information about their risk management and controls framework to multiple stakeholders. 

SOC 2 reports address controls related to security, availability, processing integrity, confidentiality, and privacy—critical areas for any organization handling sensitive data or providing technology services. 

Specialized attestation services 

Beyond traditional financial and operational attestations, specialized services address specific industry needs: 

• Compliance attestations verify adherence to regulatory requirements specific to your industry  
• Cybersecurity attestations validate your information security controls and risk management practices through penetration testing services required by certain laws like HIPAA and GLBA 
• Sustainability reporting assurance provides credibility to environmental and social responsibility disclosures

Learn more about our Blockchain and Digital Assets Consulting Services

How third-party attestations drive investor confidence 

Objective validation of management assertions 

Your management team naturally believes in your company’s controls and processes, but external stakeholders need independent confirmation. Attestation impacts stakeholder trust by providing an independent review of financial reports, building confidence among investors, creditors, and other stakeholders who rely on credible financial data for decision-making. 

This objective validation becomes particularly valuable during critical business moments like fundraising, mergers and acquisitions, or loan applications. Potential investors and lenders can rely on third-party verification rather than solely trusting internal representations. 

Proactive risk identification and management 

Attestation services don’t just verify current controls—they help identify potential weaknesses before they become problems. SOC reports can help organizations lower inherent risks by identifying and addressing potential weaknesses in their systems and proactively identify efficiency issues and duplicate controls. 

This proactive approach demonstrates to stakeholders that your organization takes risk management seriously and continuously works to strengthen its operational foundation. 

Enhanced transparency and communication 

Third-party attestations provide a standardized way to communicate complex information about your controls and processes. Rather than each stakeholder conducting their own evaluation, you can provide comprehensive, professional reports that address common concerns and questions. 

This transparency is critical to advancing your competitive advantage when reliance on outsourced parties grows, helping to deliver comfort and assurance to customers, shareholders, suppliers, regulators, and other stakeholders. 

Strategic benefits beyond compliance 

Competitive differentiation 

In competitive markets, third-party attestations can set your organization apart. They signal to potential customers, partners, and investors that you operate at a higher standard of transparency and control maturity. This differentiation becomes particularly valuable in industries where trust and reliability are key competitive factors. 

Operational improvements 

The attestation process itself often reveals opportunities for operational enhancement. These reports help in identifying potential weaknesses in the organization’s controls and processes and enable management to make decisions regarding risk mitigation. 

Many organizations find that preparing for attestation engagements leads to stronger internal processes, better documentation, and more consistent control execution—benefits that extend far beyond the attestation itself. 

Stakeholder efficiency 

Rather than responding to multiple individual requests for information about your controls and processes, comprehensive attestation reports allow you to address stakeholder inquiries efficiently. These processes offer a cohesive, repeatable approach so you can assess once and then report out to many stakeholders. 

Choosing the right attestation approach 

Assess your stakeholder needs 

Start by understanding what your key stakeholders need. Different types of investors, lenders, and business partners may have varying expectations for the level and type of assurance they require. 

Consider these questions:  

• What specific concerns do your stakeholders have about your organization?  
• Are there industry-specific requirements or expectations you need to meet?  
• How do your competitors approach third-party validation?

Align with your business strategy 

Your attestation strategy should support your broader business objectives. If you’re planning to raise capital, certain types of attestations may be expected or required. If you’re expanding into new markets or launching new services, attestations can help establish credibility with new stakeholders. 

Consider timing and resources 

Attestation engagements require investment in both time and resources. However, the most successful organizations view this as an investment in stakeholder confidence rather than simply a compliance cost. Plan attestation timing to align with your business calendar and key stakeholder communications. 

Building a culture of transparency 

Internal preparation and buy-in 

Successful attestation engagements start with strong internal preparation. Your team needs to understand not just what controls exist, but why they matter and how they support broader business objectives. This understanding helps create a culture where transparency and accountability are valued, not just mandated. 

Ongoing commitment 

Third-party attestations are most effective when they represent ongoing commitment to transparency rather than one-time exercises. Regular attestations demonstrate consistent attention to control effectiveness and continuous improvement. 

Communication strategy 

Don’t let your attestation efforts go unnoticed. Develop a communication strategy that highlights your commitment to transparency and the specific steps you’ve taken to validate your controls and processes. This communication should be tailored to different stakeholder groups and integrated into your broader business development and investor relations activities. 

The long-term value proposition 

Investing in third-party attestations creates compound benefits over time. As your organization builds a track record of successful attestations, stakeholder confidence grows, potentially leading to: 

• Better terms on financing arrangements  
• Faster due diligence processes in transactions  
• Enhanced reputation in your industry  
• Competitive advantages in new business opportunities  
• Reduced insurance premiums and risk-related costs

These reports offer potential buyers assurance that your organization has established mature internal controls, serving as a valuable tool for evaluating company health and independently validating the adequacy of your control environment. 

Moving forward with confidence 

Third-party attestations represent more than compliance requirements or stakeholder expectations—they’re strategic tools for building the kind of transparency and accountability that drives long-term business success. In an increasingly complex business environment, organizations that proactively demonstrate their commitment to robust controls and transparent operations will have distinct advantages in attracting investment, securing partnerships, and achieving sustainable growth. 

The key is approaching attestations not as burdens to be minimized, but as opportunities to showcase your organization’s commitment to operational excellence and stakeholder service. When done thoughtfully and strategically, third-party attestations become powerful assets in building and maintaining the investor confidence that fuels business success. 

Ready to strengthen stakeholder confidence through strategic third-party attestations? BPM’s experienced assurance team can help you develop and implement an attestation strategy that supports your business objectives while demonstrating your commitment to transparency and accountability. Contact us today to discuss how our services can help build the investor confidence that drives your organization’s growth and success. 

High earners face a tax optimization puzzle that most IRA guidance ignores. Generic advice assumes everyone falls into the same tax brackets and has identical retirement goals, but when you’re managing a significant retirement portfolio, the stakes are different.  

Your income likely puts you in phase-out ranges that complicate contribution strategies, and your retirement lifestyle expectations demand sophisticated tax planning that goes far beyond basic traditional IRA vs Roth IRA “pay now or pay later” comparisons.

Our analysis cuts through the generic advice to provide the nuanced perspective that ambitious, high-earning professionals need to maximize their retirement savings efficiency. 

What is a traditional IRA? 

A traditional IRA offers immediate tax advantages by allowing you to deduct contributions from your current taxable income, reducing this year’s tax bill while your investments grow tax-deferred until withdrawal.  

For high earners, however, the deduction isn’t automatic—it depends on your income level and whether you participate in an employer-sponsored retirement plan. 

For 2025, you can contribute up to $7,000 to a traditional IRA, with an additional $1,000 catch-up contribution if you’re 50 or older, bringing your total potential contribution to $8,000. These limits represent a modest increase from previous years and remain consistent across both traditional and Roth IRAs. 

The deduction phase-out creates a critical planning consideration for high earners. If you’re covered by a workplace retirement plan and are married and file jointly, your traditional IRA deduction begins phasing out at $123,000 in modified adjusted gross income and disappears completely at $143,000. For single filers, the phase-out range runs from $77,000 to $87,000.  

Here’s how this impacts your planning: 

• Full deduction available: Your entire $7,000 contribution (or $8,000 with catch-up) reduces your taxable income dollar-for-dollar 
• Partial deduction phase-out: You receive a reduced deduction based on a complex IRS calculation 
• No deduction available: You can still contribute to a traditional IRA, but receive zero current tax benefit 

This phase-out structure means many high earners lose the primary advantage of traditional IRAs—the immediate tax deduction—making the contribution decision far more complex than standard guidance suggests. The 2025 IRS contribution limits provide the complete details on these thresholds and calculations. 

What is a Roth IRA? 

A Roth IRA operates on the opposite tax principle from traditional IRAs: you contribute after-tax dollars now in exchange for completely tax-free withdrawals in retirement. This means no immediate tax deduction, but your investments grow tax-free and you’ll never owe taxes on qualified withdrawals after age 59½. 

The 2025 contribution limits mirror traditional IRAs—$7,000 for most contributors, with an additional $1,000 catch-up contribution for those 50 and older. However, Roth IRAs use income phase-outs that are significantly more generous for high earners than traditional IRA deduction limits. 

For married couples filing jointly, Roth IRA contribution eligibility begins phasing out at $230,000 in modified adjusted gross income and disappears entirely at $240,000. Single filers face phase-out between $146,000 and $153,000. This creates distinct planning opportunities compared to traditional IRAs: 

• Full contribution available: You can contribute the complete $7,000 (or $8,000 with catch-up) to your Roth IRA 
• Partial contribution phase-out: Your contribution limit reduces gradually based on your income level 
• No direct contribution allowed: You exceed income thresholds but may still access Roth benefits through backdoor conversion strategies 

The higher income thresholds mean that many high earners who lose traditional IRA deduction benefits can still contribute directly to Roth IRAs, making this option often more accessible for sophisticated retirement planning. 

Learn more about our Wealth Management Solutions

Traditional IRA vs Roth IRA: Which should high-earners invest in? 

The choice between traditional and Roth IRAs becomes particularly nuanced for high earners.  

Compare present vs future tax brackets 

Your decision hinges on comparing current tax brackets against projected retirement brackets, but the calculation extends beyond simple rate comparisons. 

Current income tax brackets favor traditional IRA deductions for many high earners, particularly those in the 32% or 35% brackets who expect lower retirement tax rates. If you’re earning enough to place you in these brackets today but plan to withdraw conservatively in retirement, the immediate tax savings from traditional IRA deductions may compound over decades. 

However, Roth IRAs offer compelling advantages for high earners who expect to maintain substantial income streams in retirement or face higher future tax rates.  Tax-free growth may become particularly valuable when managing large portfolios, as it eliminates required minimum distributions (while the account owner is alive) and provides maximum estate planning flexibility. 

Guidelines for making the choice: A practical framework for high earners 

Keep in mind that everyone’s goals and financial situation are different. Before committing to any investment strategy, consider speaking with a qualified financial advisor or wealth management professional.  

That said, this chart could be a good starting point for you to begin to consider whether a traditional IRA vs Roth IRA is better for you.  

Consider traditional IRAs when you: 

• Currently pay 32% or 35% marginal tax rates and expect to be in the 22% or 24% brackets during retirement 
• Can deduct contributions (income below phase-out thresholds) 
• Plan to relocate to a lower-tax state in retirement 
• Need current-year tax deductions to optimize your overall tax strategy 

Consider Roth IRAs when you: 

• Expect to maintain high income in retirement from business ownership, rental properties, or substantial portfolio withdrawals 
• Have maximized other tax-deferred options and want diversification 
• Prioritize estate planning benefits and tax-free wealth transfer 
• Are already phased out of traditional IRA deductions 

For many high earners, the right retirement savings plan involves contributing to both traditional and Roth IRAs at different points in your career or even concurrently. Tax diversification provides flexibility to optimize withdrawals based on your actual retirement tax situation rather than today’s projections.  

You might prioritize traditional IRA contributions during peak earning years when marginal rates are highest, then shift toward Roth strategies as income stabilizes or during years with lower taxable income.  

This approach also allows you to manage retirement tax brackets strategically—withdrawing from traditional accounts up to favorable bracket thresholds, then drawing from Roth accounts for additional needs without pushing yourself into higher tax territory. 

Keep your IRA investments tax-efficient 

No matter which IRA you contribute to (likely a combination of both), it’s important to be strategic about the investments within those accounts to help maximize your return.  

Asset location strategies optimize tax efficiency by placing different investment types in traditional versus Roth accounts based on expected returns and tax characteristics.  

High-growth investments may perform better in Roth accounts where gains remain tax-free, while bond investments may suit traditional accounts where current tax deductions offset lower expected returns. 

Create your personalized IRA strategy 

The traditional IRA vs Roth IRA decision isn’t one-size-fits-all, particularly for high earners navigating complex tax situations and substantial retirement portfolios. Your optimal strategy depends on current versus projected retirement tax brackets, income phase-out thresholds, estate planning priorities, and long-term wealth accumulation goals. 

Ready to optimize your IRA strategy for your specific situation? BPM’s wealth management team specializes in sophisticated retirement planning for high earners with complex portfolios. We help you navigate phase-out thresholds, coordinate tax-efficient strategies, and build retirement plans designed for your lifestyle goals. Get in touch with us today.  

After years of regulatory uncertainty, the U.S. Securities and Exchange Commission is preparing to introduce a framework under their “Project Crypto” that could fundamentally reshape the crypto industry, reshore crypto businesses that fled the U.S, and establish a more robust regulatory framework for crypto in the U.S. Project Crypto is expected to provide clear guidelines to use in determining whether a crypto asset is a security or subject to an investment contract. Project Crypto follows President Trump signing the GENIUS Act in to law, which helps ensure that the U.S. will continue to lead the world in global payments with a stablecoin regulatory framework. 

SEC Chair Paul Atkins recently confirmed that the agency is “on track” to release an innovation exemption for crypto activities, expected in January 2026. This marks the clearest signal yet that federal regulators are moving toward a more defined, accessible framework for crypto assets and blockchain technology, rather than the enforcement-first approach that characterized recent years. 

Understanding Project Crypto and the Innovation Exemption 

The proposed exemption would allow crypto firms to launch certain blockchain-based products more easily while still operating under formal SEC oversight. Rather than forcing companies offshore to navigate uncertain regulatory waters, this framework aims to keep innovation and economic activity within U.S. borders. 

Chair Atkins stated the agency is providing technical assistance to Congress on pending crypto asset legislation, suggesting a coordinated approach between regulatory bodies. While the recent government shutdown delayed the timeline, the SEC appears committed to finalizing this framework within weeks. 

In his speech, Paul Atkins, Chairman of the SEC, highlighted that he has:  

• Directed the Commission staff to develop a framework that will allow non-security crypto assets and crypto asset securities to be traded side-by-side on SEC-regulated platforms. 
• Asked the staff to evaluate the use of Commission authority to permit non-security crypto assets that are subject to an investment contract to trade on trading venues that are not registered with the Commission.  

Mr. Atkins also envisions an innovation exemption, permitting innovators and visionaries to enter the U.S. market with new technologies and business models without compliance with incompatible or burdensome prescriptive regulatory requirements that hinder productive economic activity. Instead, the innovator will comply with certain principles-based conditions designed to achieve the core policy aims of the federal securities laws.  

Under the direction of Mr. Atkins, the SEC will pursue such a solution to enable state-licensed crypto asset platforms that are not registered with the SEC to list certain crypto assets, as well as clear the way for CFTC-regulated platforms to offer these products with margin capabilities. 

What Makes This Different 

This represents a significant departure from previous regulatory strategy. The innovation exemption would provide: 

• Clearer compliance pathways for companies exploring blockchain-based products 
• Formal oversight structures that reduce regulatory ambiguity 
• Competitive positioning for U.S.-based firms versus offshore alternatives 
• Defined parameters for tokenized assets and on-chain products 

However, the move hasn’t been universally welcomed. Major stock exchanges warned in November that exemptions could “dilute” investor protections and create competitive imbalances by giving crypto platforms regulatory advantages unavailable to traditional markets. 

Learn more about our Blockchain and Digital Assets Consulting Services

How Major Financial Institutions Are Responding 

While concern has been expressed by some businesses and market participants, the largest U.S. financial institutions are signaling a notable shift in their approach to crypto assets and blockchain technology.  

• Blackrock’s CEO Larry Fink is on record that he would like to see the SEC rapidly approve tokenization of bonds and stocks.  
• Robinhood launched tokenized versions of U.S. stocks and ETFs for European customers, starting in June 2025.   
• Large banks such as Bank of America and Morgan Stanley have reportedly advised clients to allocate 1% – 4% of portfolios to crypto.  
• In December 2026, JP Morgan Chase arranged a $50M short-term bond on the Solana blockchain.  

What This Means for Your Business 

Federal regulators are moving toward a more defined, accessible framework for crypto assets and blockchain technology, ensuring that frameworks are built to maintain U.S. dominance in crypto asset markets. In the very near future, we should see rules for crypto asset distributions, custody, and trading for public notice and comment.  

Strategic Planning Opportunities 

For businesses exploring crypto assets or blockchain technology, the innovation exemption could open new possibilities: 

Operational Applications: Blockchain technology offers potential benefits for supply chain management, smart contracts, and transaction processing. A clearer regulatory framework may make these applications more viable for risk-conscious businesses. 

Investment Decisions: As institutional guidance normalizes crypto allocations, business owners and executives need to evaluate whether crypto assets align with their treasury management strategy and risk tolerance. 

Competitive Positioning: Companies in fintech, financial services, or technology sectors may need to assess how competitors are leveraging blockchain technology and whether the new framework creates strategic opportunities. 

The Tokenized Securities Question 

One particularly significant aspect involves tokenized stocks—traditional equities converted into blockchain-based assets that can be traded fractionally around the clock. While this technology could democratize access to equity markets, it also raises complex questions about: 

• Market structure and after-hours trading implications 
• Fractional ownership rights and shareholder protections 
• Cross-border transaction considerations 
• Integration with existing accounting and financial reporting systems 

Planning for 2026 and Beyond 

The January timeline means businesses have limited time to prepare for potential changes. Working with advisors who understand both the tax implications and the strategic considerations can help you position your business appropriately as regulations crystallize. 

This is particularly important because initial guidance often creates as many questions as it answers. Having a plan in place—and trusted advisors who can help navigate emerging details—will be more valuable than attempting to address everything reactively after the framework launches. 

Moving Forward with Confidence 

The SEC’s Project Crypto innovation exemption represents a significant moment in U.S. crypto asset and blockchain regulation. Whether it ultimately delivers on its promise of regulatory clarity while maintaining investor protections remains to be seen, but the trajectory toward more defined frameworks appears clear. 

For businesses, this is a time to stay informed, assess implications thoughtfully, and position strategically. The regulatory landscape is evolving rapidly, and understanding how these changes affect your specific situation will be increasingly important in 2026. 

Need guidance on how cryptocurrency regulations and crypto asset considerations affect your business? BPM’s tax and advisory professionals can help you navigate the evolving regulatory landscape and develop strategies that align with your business objectives. Contact us to discuss your specific situation. 

If you’re seeking financial independence by 40, you’re part of a growing movement of ambitious professionals who want to redefine what retirement looks like.  

Perhaps you have your heart set on a passion project, want to spend more time with family, or desire the freedom to choose how you spend your days. 

Retiring at 40 may seem challenging, but for high earners with the right financial plan, this goal is ambitious yet attainable.  

If you’re planning to retire at 40, it’s easy to think that aggressive saving is the only thing you’ll need, but it’s so much more than that. This goal requires sophisticated investment strategies, careful tax planning, and honest lifestyle evaluation. 

How much do you need to retire at 40? 

The amount of money you need to retire comfortably at 40 depends on several factors, with your savings strategy and timeline carrying the most weight. 

It’s much easier to visualize your portfolio requirements when you look at hypothetical numbers, so we’ve created a couple of scenarios to illustrate what retiring at 40 could look like: 

Scenario 1 

• Annual expenses: $300,000 (includes travel, multiple properties, family obligations, healthcare) 
• Required portfolio: $7.5 million 

Using the 4% withdrawal rule, this generates $300,000 before taxes annually to cover your expenses for 50+ years.  

Keep in mind that the 4% withdrawal rule wasn’t built for multiple decades’ worth of withdrawals, so your rate may need to be adjusted depending on various personal circumstances and economic conditions.  

Scenario 2 

• Annual expenses: $150,000 (modest travel, single residence, basic family needs, healthcare) 
• Required portfolio: $3.75 million 

We’ll dive deeper into the 4% rule later in this piece, but again, using this “rule”, you’d assume about $150,000 in annual income before taxes. 

In both scenarios, the calculations assumed that you wouldn’t bring in any additional income from part-time work, consulting, or other employment avenues.  

This isn’t typical for early retirees. Instead, many opt for hybrid approaches, such as consulting work, board positions, or passion projects that generate additional income. 

For example, if your chosen work brings in $50,000 to $100,000 annually, this partial income can reduce your required portfolio by $1.25-2.5 million, since you’re not entirely dependent on investment returns. 

And remember, the 4% rule isn’t an exact science and may need to be adjusted over the years, particularly during market downturns, given the longer retirement time horizon. 

Let’s look at some other calculations considering a lower withdrawal rate of 3%.  

Annual Expenses	Portfolio Needed (No Bridge Income)	Portfolio with $100K Bridge Income
$150,000	$5.0 million	$1.7 million
$200,000	$6.7 million	$3.3 million
$300,000	$10.0 million	$6.7 million
$400,000	$13.3 million	$10.0 million

These numbers are just numbers without your specific context—lifestyle goals, debts, and existing or planned financial commitments.  

Guidelines to help determine how much money you’ll need to retire at 40 

You’ve probably come across various “rules of thumb” for retirement planning, and while they can be helpful starting points, retiring at 40 requires a more nuanced approach.  

Let’s explore a couple of the most common frameworks and how they could apply to your situation: 

The 4% rule 

The 4% rule is a guideline that suggests retirees can withdraw 4% of their retirement portfolio in the first year and then adjust that amount for inflation in subsequent years. It’s based on historical market data and has become a cornerstone of retirement planning for a long time. 

While this can be helpful in certain circumstances, retiring at 40 presents some unique challenges for this rule: 

• Extended retirement periods: When you retire at 40, your portfolio potentially needs to last 50+ years—that’s 20 years longer than the original study that created the 4% rule was designed to handle. 
• Sequence of returns risk: According to more recent research, with a withdrawal rate in the 3.25-3.50% range, you would have survived even during the most challenging historical market conditions. This suggests 4% may be too aggressive for early retirement when you have such a long horizon ahead. 
• Higher absolute withdrawal amounts: A $4 million portfolio following the 4% rule generates $160,000 annually, but market volatility on larger portfolios can create swings in your available funds from year to year. 

So what other approaches might you consider? 

25x expense rule 

The traditional FIRE (Financial Independence, Retire Early) movement suggests saving 25 times your annual expenses—which is essentially the inverse of the 4% rule. For high earners, this calculation may require some careful adjustment for lifestyle costs. 

For example, a $200,000 annual expense budget would traditionally require $5 million using the 25x rule.  

But, an executive with $300,000 in annual living expenses might actually need $10 million (33x expenses) rather than $7.5 million (25x expenses) to safely support early retirement, especially given the extended timeline and lack of Social Security supplementation. 

The truth is, no single approach is perfect for everyone. Your specific situation may require custom planning based on your risk tolerance, other income sources, existing debts, planned expenses, and how your expenses might change over time. 

Evaluate your true retirement lifestyle costs 

When planning for an early retirement, it’s important to be honest with yourself about your desired lifestyle, both now and in the future, so you can create the best plan to suit your goals and dreams.  

Travel and entertainment expenses 

If you love to travel and entertain—as many successful professionals do—you should build that into your retirement savings plan. 

Consider things like: 

• Vacations—how many trips do you tend to take per year? How much do you typically spend on transportation, lodging, and experiences while there?  
• Dining—consider your current dining habits and if you’ll want to carry those over into retirement. This could be dinners out, at home chefs, catered parties, etc.  
• Hobbies—not all hobbies are created equal for your wallet. Consider the time, equipment, gear, and location expenses you may incur, especially if you plan to take up a new hobby in retirement.  

As you can start to see, these costs will add up quickly. Plus, these discretionary expenses often increase in early retirement as you have more time to pursue leisure activities and explore new interests. 

Real estate considerations 

Real estate can be quite lucrative for early retirees, but it’s important to consider all the costs that come with it, especially if you own multiple properties (primary residences, vacation homes, investment properties, etc.).  

In addition to regular mortgage payments, you’ll also need to prepare for property taxes, insurance, maintenance, and utilities. 

This makes the conversation about where you live in retirement really interesting. As you likely know, property insurance costs vary by location. Florida, for example, faces higher premiums due to hurricane risks, while California properties may carry earthquake insurance considerations.  

These nuances can make a big difference in terms of your bottom line annually per property. 

Family obligations 

Family financial commitments have a way of persisting well into retirement years, and they’re often more significant than people anticipate. 

If you have children, you might be thinking about private schooling, college, graduate programs, or even home down payment assistance.  

Many high earners also find themselves supporting aging parents with healthcare costs or providing financial assistance to adult children for home purchases or business ventures.  

Expenses like these are choices that need to align with your values—something critical to a fulfilling retirement—but they will need to be properly factored into your retirement planning. 

Healthcare expenses 

Here’s one that catches many early retirees off guard: healthcare premiums can represent one of your largest unexpected costs. 

Without employer-sponsored coverage, the average cost for a family marketplace plan is $1,483 monthly for a 40-year-old married couple with two children who don’t receive government subsidies. That totals approximately $17,800 annually—and this is before any actual medical expenses occur. 

Tax implications 

Tax considerations can become quite complex when you’re withdrawing large amounts from retirement accounts before age 59½, and this is where many people underestimate the real cost of early retirement. 

Early withdrawal penalties of 10% apply to traditional 401(k) and IRA distributions, while high earners may face federal tax rates up to 37% plus state income taxes.  

Here’s how this could play out in an example: A $300,000 annual withdrawal could result in approximately $141,000 in combined federal taxes and penalties alone. That’s nearly half your withdrawal going to taxes and penalties. 

This makes building a tax-efficient investment and withdrawal strategy extremely important. Our wealth management team can help you strategically pull from the right accounts to help minimize your tax liability and align with your lifestyle goals.  

Social Security and Medicare gaps 

Retiring at 40 creates some long-term gaps that are worth understanding upfront.  

You’ll have 25+ fewer working years contributing to Social Security, which may reduce your future benefits calculation. More importantly, you won’t qualify for Medicare until 65, requiring 25 years of private healthcare coverage. 

The combination of higher healthcare costs, tax considerations, and lack of traditional retirement benefits means early retirees typically need substantially larger portfolios than those retiring at 65. These additional costs often require portfolio value well beyond what you’d need just for basic living expenses. 

Maximize high-income saving strategies in your 20s and 30s 

Building a $4-7 million portfolio by age 40 isn’t just about saving more—it’s about saving smarter. This requires sophisticated strategies that make the most of your high earnings and take advantage of every available tax benefit. 

Max out your retirement accounts 

If you’re serious about retiring at 40, maximizing your available retirement accounts should be among your first priorities: 

• The Traditional IRA or Roth IRA contribution limit is $7,000 in 2025 
• Regular 401(k) contributions are capped at $23,500 in 2025 
• Health Savings Account (HSA) contributions allow up to $4,300 for individual coverage or $8,550 for family coverage in 2025 

Many high earners focus on maximizing these foundational contributions first, particularly capturing full employer matching—that’s essentially free money you don’t want to leave on the table. 

HSAs deserve special attention in your early retirement planning. They offer what’s often called a “triple tax advantage”: deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.  

When you’re planning to retire at 40, maximizing your HSA contributions becomes even more valuable since healthcare costs will likely represent one of your largest expense categories during those gap years before Medicare eligibility. 

Prioritize taxable investment accounts 

Here’s something many people don’t fully appreciate: taxable investment accounts become really helpful for covering expenses during those bridge years from age 40 to 59½.  

Since early withdrawal penalties make retirement accounts costly to access before age 59½, you’ll need substantial taxable investments to bridge this gap. 

The key is focusing on tax-efficient investments within these accounts—think index funds with low turnover ratios, municipal bonds, and growth stocks that generate minimal taxable distributions. Plus, realized gains from taxable accounts get preferential capital gains tax treatment (instead of ordinary income tax) if you held the investment longer than a year.  

You want your money working for you, not generating unnecessary tax bills along the way. 

Explore Backdoor Roth IRA conversions 

If you’re a high earner, you’ve probably bumped up against income limits for Roth IRA contributions. In 2025, the income limits are $165,000 for single filers and $246,000 for married couples filing jointly for direct Roth IRA contributions. 

But here’s where strategy comes in: high earners who exceed these limits can utilize the backdoor Roth approach by contributing $7,000 to a non-deductible traditional IRA and immediately converting it to a Roth IRA, effectively avoiding the income restrictions entirely. 

Level up with Mega backdoor Roth strategies 

This is where things get interesting for high earners.  

The IRS allows total annual contributions—including employee deferrals, employer matches, and after-tax contributions—of up to $70,000 total. This can create opportunity for substantial additional tax-free savings: 

• After-tax 401(k) contributions: You may be able to contribute additional after-tax dollars into your 401(k) account, up to the 401(k) contribution limits.  
• Immediate Roth conversions: If permitted by your plan, these after-tax contributions can then be converted to a Roth IRA or Roth 401(k). Future qualified withdrawal from Roth accounts are tax free.  

Plan for stock options, RSUs, and deferred compensation  

If you’re a high earner, you may also receive equity compensation, and the timing of these decisions can make a meaningful difference in your retirement timeline. 

This is often where professional guidance becomes valuable. You might want to consider consulting with BPM’s tax advisory services to optimize the timing of: 

• RSU vesting schedules to manage tax brackets across multiple years 
• Stock option exercises to take advantage of lower capital gains rates 
• Deferred compensation elections to shift income to potentially lower-earning retirement years 

The key insight here is that retiring at 40 can become much more achievable when you maximize these strategies during your peak earning years in your 20s and 30s—when both your income and time horizon for compound growth are working most powerfully in your favor. 

Design your path to financial independence 

Achieving financial independence by 40 isn’t just about hitting a specific portfolio number—though that’s certainly important. It’s about designing a retirement that genuinely aligns with your values and goals. 

The truth is, everyone’s version of early retirement looks different. Some people want to travel the world, others want to focus on family, and still others want to pursue passion projects or give back to their communities. Your plan should reflect your unique circumstances and aspirations. 

If you’re ready to explore what financial independence by 40 could look like for your specific situation, contact BPM’s wealth management team to discuss tax-efficient investment strategies, retirement account optimization, and comprehensive financial planning designed specifically for high-earning professionals pursuing early retirement. 

This material is for informational purposes only and is not intended to provide specific advice or recommendations for any individual. This information is not intended for use as tax advice. 

The examples given are hypothetical and are for illustrative purposes only. Actual results may vary from those illustrated. Securities offered through Valmark Securities, Inc. Member FINRA, SIPC | Investment Advisory services offered through BPM Wealth Advisors, LLC and/or Valmark Advisers, Inc. each an SEC Registered Investment Advisor | BPM LLP and BPM Wealth Advisors, LLC are entities separate from Valmark Securities, Inc. and Valmark Advisers, Inc.  

You’ve built significant wealth. You’ve created a family office to manage it. But have you established the governance framework needed to protect it? 

Many wealthy families assume that hiring qualified staff and setting up the right legal structures is enough. They quickly discover it’s not. Without clear governance, even the most sophisticated family offices face internal conflicts, strategic drift, and succession challenges that can fracture family relationships and erode wealth across generations. 

Strong governance isn’t about adding bureaucracy. It’s about creating clarity, alignment, and sustainability for your family’s financial future. This article will explore what effective family office governance looks like, why it matters, and how to build a framework that works for your family. 

Understanding Family Office Governance 

Family office governance is your roadmap for decision-making. It defines who makes decisions, how those decisions get made, and what principles guide them. 

Think of governance as the operating system for your family office. It coordinates all the moving parts—investment strategies, tax planning, philanthropic initiatives, and succession plans—into a coherent whole that serves your family’s shared vision. 

Your governance framework should address several key questions. Who has authority over investment decisions? How will you handle conflicts between family members? What happens when the next generation wants to take the family in a different direction? How will you balance individual needs with collective goals? 

“Without governance there is a lack of clear roles and decision making protocols which can lead to communication break downs and lack of transparency.” Kris Marney – Partner, Advisory and Family Office Services Leader 

The Core Elements of Effective Governance 

A robust governance structure rests on several foundational elements that work together to keep your family office running smoothly. 

Clear Decision-Making Authority 

Your framework must specify who makes what decisions. Does the family patriarch retain final say on all major investments? Do adult children have voting rights? What role do non-family professionals play in strategic decisions? 

Ambiguity here creates paralysis. When everyone thinks someone else should be making a decision, nothing happens. When multiple people think they have authority over the same area, conflict erupts. 
 

Defined Roles and Responsibilities 

Every family member involved in the family office needs a clear understanding of their role. Some family members serve on investment committees. Others focus on philanthropic initiatives. Still others may have no formal role but expect regular updates on family assets. Document these roles explicitly. Write them down. Review them annually.  

Transparent Communication Channels 

You can’t govern effectively without good information flow. Establish regular family meetings, reporting schedules, and communication protocols that keep everyone informed without overwhelming them with details. Different family members need different levels of information. Your governance structure should account for this by creating tiered communication systems. 

Succession Planning 

Your governance framework must address how leadership transitions from one generation to the next. This includes not just who takes over, but how you prepare them for that responsibility. 

Learn more about our Family Office Services

Common Governance Pitfalls to Avoid 

Many family offices stumble over the same obstacles. You can avoid them by staying alert to these common mistakes. 

Static Governance Models 

Your family changes. Your wealth grows or contracts. Market conditions shift. Your governance framework must evolve alongside these changes. Review your governance structure every two to three years at minimum. After major family events—marriages, divorces, births, deaths—revisit it sooner.  

Confusing Family and Business Roles 

Family members often wear multiple hats. Someone might be a son, a shareholder, and an employee of a family business simultaneously. Your governance framework needs to distinguish clearly between these roles and prevent conflicts of interest. 

Avoiding Difficult Conversations 

Governance breaks down when families postpone hard discussions. You need to address potential conflicts head-on—before they become actual conflicts. This means having frank conversations about money, values, competence, and family dynamics. It’s uncomfortable. It’s also necessary. 

Inadequate Professional Support 

Some families try to handle complex governance issues without proper guidance. This often leads to gaps in their framework that create problems later. You need the right advisors helping you build and maintain your governance structure. 

Building Your Governance Framework 

Creating effective governance starts with honest assessment. Where does your family office stand today? What works well? What causes friction or confusion? 

• Gather input from all stakeholders. Family members have different perspectives based on their generation, involvement level, and relationship to family wealth. These perspectives all matter. 
• Define your family’s shared purpose and values. What does your family stand for? What do you want your wealth to accomplish? Your governance structure should reflect and reinforce these core principles. 
• Document everything. Verbal agreements fail when memories differ or circumstances change. Put your governance policies, decision-making processes, and conflict resolution procedures in writing. 
• Start simple and add complexity as needed. You don’t need a corporate-style governance structure if you’re a small family with straightforward needs. But you should build a framework that can scale as your family and assets grow. 

How BPM Supports Your Family Office Governance 

At BPM, we understand that every family office is unique. Your governance needs depend on your family dynamics, wealth complexity, and long-term objectives. We work alongside you to design governance frameworks that bring clarity without rigidity, structure without bureaucracy. 

Our team helps you facilitate the difficult conversations that strong governance requires. We bring an outside perspective that can help family members hear each other more clearly and find common ground on contentious issues. We’ve seen what works—and what doesn’t—across numerous family offices, and we apply those insights to your specific situation. To discuss how we can help you build a framework that protects your wealth and preserves family harmony for generations to come, contact us.  

If your business has significant California operations, maintained a presence in the state over the past decade, or acquired a California-based company, you may soon receive a letter from the California State Controller’s Office (SCO) that demands immediate attention.  

Starting in mid-to-late November 2025, the SCO will begin mailing outreach letters to approximately 4,000 businesses identified as potentially holding unreported unclaimed property—and this represents just the first wave of a multi-year compliance initiative extending throughout 2026. 

What You Need to Know 

California is launching an aggressive outreach campaign targeting businesses with potential unreported unclaimed property. The state’s Voluntary Compliance Program (VCP) offers a complete waiver of interest (which accrues at 12% annually) for businesses that proactively address past compliance gaps.  

While the program requires substantial effort—including a 10-year records review, mandatory training, and due diligence—the financial benefits can be significant, often eliminating six or seven-figure interest liabilities. Businesses should also remember that they may have unclaimed property due to them from the state, which could help offset compliance costs.  

Organizations with California operations, especially those with inconsistent filing histories or recent acquisitions, should assess their exposure now, whether or not they receive an outreach letter. 

Understanding the Financial Stakes and Opportunities 

This isn’t a typical regulatory notice you can file away. For many businesses, the financial stakes are substantial, with potential interest liabilities reaching six or seven figures. But California’s Voluntary Compliance Program offers a strategic path forward that can eliminate these exposures entirely while bringing your organization into full compliance with state unclaimed property laws. 

It’s also worth noting that while you may owe unclaimed property to California, your business may simultaneously have unclaimed property held by the state that belongs to you. Conducting a search for unclaimed property due to your organization could help offset some of the costs associated with achieving compliance. 

Understanding California’s Heightened Focus on Unclaimed Property 

California has steadily increased its enforcement posture around unclaimed property reporting over the past several years. Since 2021, the state has required businesses to answer specific questions about unclaimed property filings directly on their California income tax returns (Forms 100, 100W, and others). These questions ask whether your business has filed unclaimed property reports and how much property was remitted. 

The SCO now has direct access to this tax return information, creating a powerful data-matching capability to identify businesses that may have reporting obligations but haven’t filed. This November mailing represents the SCO’s most aggressive outreach effort to date, targeting the largest potential holders first before expanding to additional business segments in subsequent waves. 

The Financial Case for Voluntary Compliance 

California law imposes interest on unreported unclaimed property at 12 percent per year—a rate that can quickly transform a manageable compliance gap into a significant financial liability. For a business with $500,000 in unreported property dating back five years, the accumulated interest alone could exceed $300,000. 

The Voluntary Compliance Program was specifically designed to incentivize businesses to come forward proactively. Holders who successfully complete the VCP receive a full waiver of all accrued interest on past-due property. This single benefit can eliminate years of accumulated liability, making the program one of the most valuable compliance opportunities available to California businesses. 

Who Should Be Paying Attention 

While the SCO’s outreach targets businesses across various industries and sizes, certain organizations face higher risk profiles: 

• California-domiciled businesses that may have accumulated reportable property over multiple years without establishing formal compliance processes 
• Companies with substantial California operations that maintain payroll, vendor relationships, or customer accounts in the state 
• Businesses that acquired California-based entities within the past 10 years, potentially inheriting unclaimed property obligations along with assets 
• Organizations with inconsistent filing histories or those that have never filed California unclaimed property reports despite having state nexus 

If your business falls into any of these categories, now is the time to conduct a proactive review—whether or not you receive an SCO outreach letter. 

Learn more about our State and Local Taxes Services

Navigating the VCP Process: Key Requirements and Timelines 

The California VCP follows a structured process with specific deadlines and obligations. Understanding these requirements upfront will help you assess whether the program makes sense for your organization. 

Eligibility Criteria 

Before applying, confirm your business meets the basic eligibility requirements. You cannot participate in the VCP if your organization: 

• Is currently under SCO audit or has received notice of an impending audit 
• Is subject to civil or criminal prosecution related to unclaimed property compliance 
• Has received an interest assessment within the past five years that remains unpaid
• Has previously participated in the VCP and received an interest waiver within the past five years 

One important exception: businesses seeking to resolve unclaimed property liabilities related to a recent acquisition or merger may still qualify for the program under certain circumstances, even if they’ve previously participated. 

The VCP Timeline 

Once your application is approved, California requires strict adherence to program deadlines: 

1. Complete Mandatory Training: All participating staff must complete the SCO’s two-hour online training session, which covers California’s unclaimed property requirements and reporting obligations. 

2. Conduct a Comprehensive Records Review: Your business must examine its books and records for at least the past 10 years to identify any unclaimed property. This lookback period means you’ll need to gather and analyze a substantial volume of historical data. 

3. Perform Due Diligence: If you identify unclaimed property, you must send due diligence notices to the property owners, giving them the opportunity to reclaim their assets before the state takes custody. 

4. File Your Notice Report: After allowing at least 30 days for owner responses, submit a “notice” report to the SCO listing all unresolved property. Importantly, no remittance is required at this stage. 

5. File Your Remit Report: Between seven and seven-and-a-half months after submitting your notice report, you must file your final “remit” report and transfer the identified property to the state. 

Strategic Considerations: Beyond Immediate Compliance 

While the interest waiver represents the most tangible benefit of California’s VCP, participating in the program offers broader strategic advantages that shouldn’t be overlooked. 

Building Sustainable Compliance Infrastructure 

Successfully completing the VCP requires developing robust processes for identifying, tracking, and reporting unclaimed property. These systems don’t just satisfy California’s requirements—they create a foundation for managing unclaimed property obligations in the dozens of other states where your business may have reporting responsibilities. Many organizations discover that the investment in VCP compliance pays dividends by preventing future non-compliance issues across multiple jurisdictions. 

Managing Audit Risk Proactively 

The SCO retains audit authority even after VCP completion, and any property discovered during a subsequent audit that wasn’t disclosed through the program may still be subject to interest and penalties. This reality underscores the importance of conducting a thorough, accurate records review during your VCP participation. A half-hearted compliance effort can actually increase your risk rather than reduce it. 

Protecting Transaction Value 

For businesses contemplating mergers, acquisitions, or other strategic transactions, unaddressed unclaimed property liabilities can emerge as unexpected complications during due diligence. Buyers increasingly scrutinize unclaimed property compliance as part of their risk assessment, and material exposures can affect transaction valuations or deal terms. Resolving California obligations through the VCP can eliminate these concerns before they impact transaction discussions. 

If You Receive an Outreach Letter: Immediate Action Steps 

The arrival of an SCO outreach letter should trigger a prompt, structured response: 

Assess Your Actual Obligations  

Not every business that receives a letter will ultimately have reportable property, but the letter itself signals that California has identified your organization as a potential holder. Conduct an initial assessment to determine whether you’ve maintained the types of accounts, payments, or relationships that typically generate unclaimed property. 

Evaluate VCP Eligibility 

Review your organization’s current status against the eligibility criteria. If you’re already under audit or investigation, the VCP isn’t available, but if you’re eligible, moving quickly can preserve your access to the program’s benefits. 

Consider Your Compliance History Businesses that have never filed California unclaimed property reports or have filed inconsistently should treat the outreach letter as a priority. The combination of potential back-year liability and 12 percent annual interest creates significant exposure that the VCP can resolve. 

Document Your Decision Process 

Whether you decide to participate in the VCP or conclude that your business doesn’t have California reporting obligations, document your analysis and the basis for your determination. This documentation becomes important if the SCO follows up with additional inquiries or initiates an audit in the future. 

The Broader Unclaimed Property Landscape 

While California’s current outreach initiative focuses specifically on VCP enrollment, it’s part of a national trend of states intensifying their unclaimed property enforcement efforts. According to the National Association of Unclaimed Property Administrators, states collectively hold more than $70 billion in unclaimed property, and they’re increasingly sophisticated in their efforts to identify non-compliant holders. 

Many states have established their own voluntary compliance programs, often modeled after California’s approach but with varying benefits and requirements. Additionally, states are collaborating more effectively through information-sharing initiatives and coordinated audit programs. A compliance gap in California may indicate potential issues in other jurisdictions where your business operates. 

Taking Action: Your Next Steps 

Whether your organization receives an SCO outreach letter or not, California’s intensified focus on unclaimed property should prompt a proactive response. Consider these strategic steps: 

1. Conduct a compliance health check to assess your current unclaimed property processes and identify potential gaps 

2. Review your California nexus and operations to determine your level of exposure to state reporting requirements 

3. Evaluate recent acquisitions to understand whether you’ve assumed unclaimed property obligations through business combinations 

4. Assess your readiness to respond quickly if you do receive an outreach letter in the coming months 

The November 2025 outreach represents California’s opening move in what promises to be a sustained, multi-year compliance initiative. Organizations that respond proactively—establishing robust processes, resolving past-year obligations, and positioning themselves for ongoing compliance—will be better positioned to manage both the immediate requirements and the evolving regulatory landscape ahead. 

Get Strategic Guidance on California Unclaimed Property Compliance 

BPM’s State and Local Tax professionals work closely with businesses navigating California’s unclaimed property requirements, from initial compliance assessments through VCP participation and ongoing reporting obligations. We can help you evaluate your exposure, understand your options, and develop a strategic response that protects your organization while taking advantage of available programs and benefits. 

Contact us today to discuss how California’s Voluntary Compliance Program might apply to your business and what steps you should take before year-end to position your organization for successful compliance in 2026 and beyond. 

As you prepare your nonprofit for 2026, you’re facing a convergence of unprecedented challenges and opportunities. From financial pressures and workforce burnout to digital transformation and heightened accountability demands, the sector stands at a critical inflection point. Understanding these evolving dynamics (and developing strategic responses) will determine which organizations thrive versus merely survive in the year ahead. 

This outlook examines the five nonprofit industry trends shaping the nonprofit landscape and provides actionable guidance to help you navigate this complex terrain with confidence. 

Top 5 Nonprofit Industry Trends Impacting Nonprofits in 2026 

1. Financial Instability Creates an Urgent Need for Revenue Diversification 

The financial ground beneath nonprofits continues to shift dramatically. If your organization relies heavily on government grants or traditional donations, you’re likely feeling the squeeze from multiple directions. 

Government Funding Volatility Takes Center Stage 

With two-thirds of nonprofits dependent on at least one government grant, the October 2025 federal shutdown served as a stark reminder of funding vulnerabilities. Your organization may be among those that would struggle to cover expenses if government funding disappeared. Ongoing uncertainty around changing agendas has also led to frozen assets and the stoppage of government funding.  

Individual Giving Patterns Shift Dramatically 

While total fundraising increased 3.6% in early 2025, donor numbers actually fell. You’re likely raising more money from fewer supporters—a dangerous trend when average donor retention rates have plummeted to just 42.6%. This concentration of revenue sources amplifies your risk exposure. 

Rising Costs Compound the Challenge 

Many nonprofits lack sufficient funds to deliver current programs, and most anticipate increased service demand in 2026. Your organization faces difficult choices: 

• Drawing down reserves meant for emergencies 
• Reducing staff when you need them most 
• Scaling back services when communities need them more than ever 

2. The Workforce Crisis Reaches a Breaking Point 

Your people are your mission delivery system, but that system is under extreme stress. The numbers tell a sobering story about the human cost of nonprofit work. 

Burnout Becomes Endemic 

When 95% of nonprofit leaders express concern about burnout and only 45% of employees plan to stay in their current roles, you’re facing more than a retention challenge; you’re confronting an existential threat to organizational capacity. Your staff members juggle multiple responsibilities beyond their job descriptions while watching peers in other sectors earn significantly more for less stressful work. 

Compensation Gaps Widen 

Consider this reality: 22% of nonprofit employees earn below the ALICE threshold, struggling to make ends meet while serving others. The impact hits communities of color disproportionately, with 34% of Black nonprofit employees and 35% of Hispanic employees facing financial hardship. When your team members can’t afford basic necessities, mission sustainability becomes impossible. 

Leadership Succession Looms Large 

As Baby Boomer executives approach retirement, you may wonder who will step into these critical roles. Many mid-level managers lack comprehensive experience in areas like: 

• Federal funding navigation 
• Budget creation and management 
• Human resources complexities 
• Public representation and advocacy 

Without intentional succession planning, your organization risks leadership vacuums at the worst possible time. 

3. Digital Transformation and AI Move from Optional to Essential 

Technology adoption, particularly artificial intelligence, no longer represents a nice-to-have capability—it’s becoming fundamental to competitive positioning and mission effectiveness. 

AI Amplifies Your Capacity 

Forward-thinking nonprofits are deploying AI as a force multiplier across multiple functions: 

• Creating hyper-personalized donor communications that move beyond basic segmentation 

• Using predictive modeling to identify lapse risks and upgrade opportunities 

• Automating content generation for consistent messaging 

• Building unified data ecosystems connecting fundraising, finance, and impact measurement 

Donor Expectations Mirror Commercial Experiences 

Your supporters expect the same personalized, seamless experiences they receive from Netflix or Amazon. Basic email segmentation no longer suffices when donors anticipate communications tailored to their specific interests, giving history, and engagement preferences. Organizations failing to meet these expectations face higher attrition rates. 

Hybrid Engagement Models Become Permanent 

The pandemic-era shift to digital hasn’t reversed—it’s evolved. Your stakeholders now expect: 

• Events offering both in-person and virtual participation options 
• Livestreamed galas with interactive online components 
• Virtual donor engagement opportunities that expand geographic reach 
• Accessibility features that include rather than exclude participants 

4. DEI Initiatives Face Political and Legal Headwinds 

Your commitment to diversity, equity, and inclusion faces new complexities as political scrutiny intensifies and legal landscapes shift. 

Federal Policy Changes Create Compliance Challenges 

Executive orders restricting DEI requirements in federally funded programs create both direct and indirect impacts. If you receive federal funding, you’re navigating: 

• Prohibitions on race-based criteria in grant applications 
• Restrictions on DEI statement requirements 
• Increased scrutiny from conservative watchdog groups 
• Complex compliance rules affecting university and government partnerships 

Funders Maintain DEI Expectations 

Despite political pressures, 82% of funders still request DEI metrics in funding applications. Foundations prioritize organizations demonstrating: 

• Inclusive board leadership reflecting community demographics 
• Equitable community engagement practices 
• Transparent diversity progress reporting 
• Authentic representation throughout organizational levels 

Strategic Adaptation Becomes Critical 

Many nonprofits are shifting language while maintaining core commitments, replacing race-based terminology with equity-focused language that accomplishes similar goals. State-level protections in certain regions provide additional flexibility, creating geographic variations in approach. 

5. Transparency and Accountability Demands Intensify 

Stakeholder expectations for organizational transparency have evolved from basic compliance to comprehensive accountability across all operations. 

Trust Serves as Your Foundation 

Every relationship your nonprofit maintains—with donors, beneficiaries, partners, and communities—rests on trust. Lack of transparency creates cascading consequences: 

• Donor skepticism about fund usage 
• Difficulty attracting talented board members and staff 
• Reduced advocacy credibility 
• Missed opportunities for organizational improvement 

Financial Disclosure Goes Beyond Compliance 

Meeting legal requirements represents just the starting point. Best-in-class organizations now provide: 

• Detailed breakdowns of revenue sources and expenditures in accessible formats 
• Visual representations of financial data through infographics and dashboards 
• Clear allocation details showing program versus administrative expenses 
• Proactive publication of financial documents on organizational websites 

Impact Measurement Becomes Non-Negotiable 

Your donors want tangible evidence connecting their support to real-world outcomes. They expect: 

• Success stories tied directly to their contributions 
• Quarterly updates featuring financial and program highlights 
• Annual briefings discussing performance against stated goals
• Opportunities to provide feedback and shape future directions 

Learn more about our Nonprofit Industry Solutions

How BPM Supports Your Nonprofit’s Success 

At BPM, we understand the unique challenges facing nonprofit organizations in 2026. Our dedicated nonprofit practice combines deep sector knowledge with practical solutions designed to strengthen your financial foundation, enhance operational efficiency, and amplify your mission impact. 

We partner with nonprofits to: 

• Develop sustainable financial strategies and diversified revenue models 
• Implement technology solutions that streamline operations and enhance donor engagement 
• Navigate complex compliance requirements while maintaining mission focus 
• Build transparent reporting systems that satisfy stakeholder expectations 
• Create succession plans and leadership development frameworks 

Our approach goes beyond traditional accounting services. We serve as strategic advisors who understand that your success isn’t measured solely in financial terms but in lives changed and communities transformed. 

Take Action Today 

The trends shaping 2026 require decisive action now. Whether you’re grappling with financial sustainability, workforce challenges, or digital transformation, you don’t have to navigate these complexities alone. 

Connect with BPM’s nonprofit team to discuss how we can support your organization’s unique needs and help you build a stronger foundation for mission success. Contact us at [contact information] to schedule a conversation about your 2026 strategic priorities. 

Together, we can transform today’s challenges into tomorrow’s opportunities for greater impact. 

The consumer industry stands at a pivotal moment. As market dynamics shift and consumer expectations evolve, companies face mounting pressure to transform their business models while protecting margins and building resilience.  

Success in this environment requires more than incremental adjustments. It demands fundamental changes to how organizations operate, engage customers, and create value. The companies that thrive will be those that embrace transformation as an ongoing capability rather than a one-time initiative. 

Six Trends Driving the Consumer Sector Next Year 

1. Direct-to-Consumer and Experience Commerce 

The migration from wholesale-first to direct-to-consumer models continues to accelerate as brands seek greater control over customer relationships and data. This shift reflects a fundamental change in how companies create and capture value. 

Leading consumer companies are building integrated commerce technology stacks that unify online and offline experiences, enabling seamless shopping across all touchpoints. The focus has moved beyond simple transactions to creating repeatable, high-value experiences through subscription services and membership programs that drive lifetime customer value. 

These models provide the dual benefit of predictable revenue streams and rich behavioral data that inform product development and marketing strategies. The challenge lies in balancing DTC growth with traditional wholesale partnerships while managing the operational complexity of fulfillment, customer service, and returns across multiple channels. 

2. Supply-Chain Resilience, Tariff Mitigation Strategies, and Nearshoring 

The era of prioritizing lowest-cost sourcing above all else has ended. Today’s consumer companies recognize that supply-chain resilience and agility create competitive advantages worth paying for. 

Strategic shifts include diversifying supplier bases to reduce concentration risk, regionalizing production to shorten lead times, and investing in visibility technologies such as digital twins and real-time inventory systems. These investments help companies anticipate disruptions, respond faster to demand changes, and reduce working capital tied up in safety stock.  

Tariff mitigation requires equal attention alongside these operational improvements. Some companies are conducting comprehensive tariff engineering reviews—analyzing product classifications, exploring duty drawback programs, and leveraging foreign trade zones to defer or reduce customs costs.  

Country-of-origin planning has become a strategic imperative, with manufacturers evaluating how production footprint decisions affect tariff exposure across their entire product portfolio. First-sale rules, bonded warehousing, and temporary import programs offer additional levers for companies willing to invest in customs expertise.  

Nearshoring and friendshoring strategies gain momentum as companies weigh total cost of ownership—including speed to market, quality control, and risk mitigation—against simply chasing the lowest per-unit manufacturing cost. 

3. Data and Privacy-First Personalization 

The deprecation of third-party cookies and the expansion of privacy regulations fundamentally change how consumer companies understand and reach their customers. Success now depends on earning consumer trust and consent to collect first-party data. 

Organizations must invest in customer data platforms (CDPs) that consolidate consented data from multiple touchpoints, creating unified customer profiles while respecting privacy preferences. Transparent opt-in mechanisms and clear value exchanges (exclusive access, personalized recommendations, or special pricing) encourage consumers to share their data willingly.  

Companies that achieve privacy-first personalization will have a sustainable competitive advantage as competitors struggle to replicate the depth of customer understanding that can only come from direct, consented relationships. 

4. Agile Innovation and Product Differentiation 

Consumer preferences evolve faster than ever, and traditional product development cycles cannot keep pace. Companies are adopting agile innovation models that enable rapid prototyping, testing, and scaling of new products and concepts. 

Limited-edition releases and micro-brand strategies allow organizations to test market response with controlled risk. Fast feedback loops from DTC channels provide real-time insights that inform iteration decisions. This approach requires: 

• Cross-functional teams empowered to make decisions quickly 
• Flexible manufacturing partnerships that accommodate short runs 
• Digital infrastructure that supports rapid go-to-market execution 
• Cultural acceptance of learning through controlled failures 

Organizations that build these capabilities can outmaneuver slower competitors and capture emerging trends before they reach saturation. 

5. Pressure and Channel Economics 

Rising input costs, promotional intensity, and channel complexity create a perfect storm of margin pressure. Consumer companies must become more sophisticated in how they protect profitability without eroding brand equity. 

Strategic responses include developing more nuanced price architecture that captures value from different customer segments, implementing dynamic promotion strategies informed by real-time competitive data, and rationalizing SKU portfolios to focus resources on the highest-performing products.  

Automation in order management, fulfillment, and customer service reduces per-transaction costs while improving speed and accuracy. These operational improvements, combined with strategic pricing and assortment decisions, help maintain healthy margins in a challenging environment. 

Learn more about our Consumer Business Industry Solutions

Strategic Imperatives for Consumer Industry Leaders 

To navigate these trends successfully, consumer company leaders should prioritize several key actions: 

• Invest in integrated technology platforms that enable omnichannel commerce and unified customer data management 
• Embed sustainability into core product development processes and supply-chain decisions, measuring impact transparently 
• Build supply-chain resilience through diversification, regionalization, and advanced visibility tools 
• Develop capabilities for rapid innovation cycles that allow testing and learning at lower risk 
• Implement sophisticated pricing and promotion strategies that preserve margins while maintaining competitive positioning 

How BPM Can Help 

BPM works alongside consumer companies to address these complex challenges through our integrated services in accounting, tax, audit, and advisory. Our professionals help clients optimize their tax structures for DTC expansion, implement financial controls for new business models, evaluate the financial implications of supply-chain shifts, and develop reporting frameworks for sustainability initiatives. 

From transaction advisory for nearshoring decisions to operational assessments of omnichannel infrastructure, BPM provides the financial and strategic guidance consumer companies need to transform with confidence. Contact us to discuss how we can support your organization’s growth and transformation initiatives. 

On November 6, 2024, San Francisco voters decisively approved Proposition M, implementing significant changes to the city’s business tax system aimed at creating a fairer and more resilient structure. The measure passed with approximately 69% of the vote, reflecting strong support across the political spectrum for reforming business taxes to better suit the modern economic landscape.

Implications for Businesses

2025

Businesses operating in or generating revenue from San Francisco must prepare for the implementation of the new tax structures effective January 1, 2025. Companies are advised to:

• Review and adjust financial strategies to accommodate potential increases in tax liabilities.
• Assess the impact of shifts in tax calculation methods, particularly the emphasis on sales over payroll.
• Seek professional tax advice to navigate the complexities of the new system and ensure compliance.

As Proposition M reshapes the fiscal landscape, careful planning and adaptation will be crucial for businesses to mitigate potential impacts and leverage any benefits offered by the reforms.

2026

San Francisco businesses should mark their calendars for several important tax and filing deadlines in 2026 related to the city’s new business tax regulations:

• March 2, 2026: First Annual Business Tax filing and Business Registration Renewal deadline under the new rules. Businesses needing an extension must submit a request by this date and pay 110% of the previous year’s tax obligations.
• March 31, 2026: Approximately $10 million in certain permit, license, and other fees will be waived for qualifying businesses.
• November 30, 2026: New extension deadline for Annual Business Tax filings, aligning San Francisco deadlines with California state requirements.

Don’t wait until the March 2026 deadline to understand your new obligations. As San Francisco’s business tax structure transforms in 2025, early preparation is essential. Our SALT team can assess how Proposition M impacts your specific situation, calculate your projected liability under the new system, and develop a compliance roadmap tailored to your business.

Key changes introduced by Proposition M

One of the primary objectives of Proposition M is the simplification of the business tax system. The measure consolidates the existing 14 business tax categories into seven, reducing complexity and making it easier for businesses to comply with tax regulations. This streamlining is expected to decrease compliance hurdles and reduce the administrative burden on businesses, particularly benefiting small enterprises that may lack extensive resources for tax management.

Adjustment of gross receipts tax calculation

Proposition M also revises the calculation of the gross receipts tax, shifting the basis more towards sales and less on payroll expenses. Specifically, the new calculation is based 75% on sales and 25% on payroll, a significant change from the previous structure. This adjustment aims to address the evolving nature of business operations, especially with the rise of remote work and companies generating substantial revenue with minimal physical presence in the city.

Impact on small and large businesses

While the reforms are designed to support vulnerable businesses, the impact varies across different sizes of enterprises:

• Small Businesses: Many small businesses are expected to experience reduced tax burdens or minimal changes due to Proposition M. By decreasing the financial load on these entities, the city hopes to foster local entrepreneurship and sustain the vibrancy of the small business sector.
• Mid-sized and Large Businesses: In contrast, mid-sized and large employers may face significantly increased tax rates, with some seeing their rates double or even quadruple. This substantial increase reflects an effort to ensure that larger corporations contribute a fair share to the city’s revenue, acknowledging their greater capacity to absorb higher taxes.

Expansion of tax base

A notable element of Proposition M is the introduction of city tax liability for businesses with no physical nexus in San Francisco. This means that companies generating revenue from San Francisco residents or activities, even without a physical location in the city, will now be subject to city business taxes. This change recognizes the digital economy’s realities, where businesses can have a significant economic presence without traditional brick-and-mortar establishments.

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Financial projections and revenue implications

According to the Controller for the City and County of San Francisco, Proposition M is projected to reduce city revenue by $40 million during the first three fiscal years due to transitional adjustments. However, starting in 2027, revenues are expected to increase by $50 million annually because of scheduled tax rate increases and the broader tax base. By the fiscal year 2029–2030, the increased revenue is anticipated to fully offset earlier reductions, contributing to a more stable and robust financial outlook for the city.

Broad Support from Political and Business Leaders

The passage of Proposition M garnered widespread support from political figures, business groups, and labor organizations. All major candidates in the city’s mayoral race endorsed the measure, highlighting its significance to San Francisco’s economic future. A pro-Proposition M rally showcased mayoral contenders united in their backing, demonstrating a rare consensus across the political spectrum on the need for tax reform. This collective support underscores the belief that Proposition M will foster a more equitable business environment and bolster the city’s financial health.

Adapting to the modern economic landscape

Proposition M is seen as a response to the changing dynamics of business in an era marked by technological advancements and shifts toward remote work. By aligning the tax system with contemporary business models, the city aims to capture revenue from a diverse array of economic activities while ensuring that taxation is fair and reflective of actual business operations. This approach is intended to create a sustainable fiscal structure that can adapt to future economic developments.

Conclusion

The approval of Proposition M represents a pivotal shift in San Francisco’s approach to business taxation. By overhauling the tax system, the city seeks to balance the need for increased revenue with the goal of fostering an equitable and competitive business environment. The measure’s passage reflects a collective recognition of the necessity to adapt to the evolving economic context, ensuring that the city’s fiscal policies support both its financial stability and the vitality of its business community.

Succession planning keeps many family office leaders awake at night. You’ve spent years building wealth, nurturing relationships, and creating systems that work. Now you face the challenge of passing the torch without dropping it.  

Family Office Succession Planning: Essential Steps to Take 

The stakes are high. Poor succession planning can fracture family relationships, erode wealth, and dismantle decades of careful stewardship. Yet many families delay these conversations until crisis forces their hand. This article will walk you through the essential steps to create a succession plan that protects your family’s legacy while preparing the next generation to lead. 

Start with Honest Conversations About the Future 

You cannot plan for succession without first discussing it openly. Too many families avoid these conversations because they feel uncomfortable or premature. This avoidance creates risk.  

Begin by gathering key stakeholders—family members, trusted advisors, and senior family office staff. Discuss your vision for the future. What do you want your family office to accomplish in the next decade? Who shows interest in leadership roles? What concerns do people have about the transition? 

These initial conversations reveal gaps in understanding and alignment. You might discover that your intended successor has different career aspirations. Or that multiple family members want the same role. Better to learn this now than during a crisis. 

Map Your Leadership Succession Timeline 

Effective succession happens in phases, not overnight. You need to create a realistic timeline that gives everyone adequate runway. 

Consider three horizons: 

• Immediate (0-2 Years): Identify emergency successors for critical roles. What happens if your current family office leader becomes unavailable tomorrow? Document essential responsibilities and relationships. Make sure at least one other person understands each critical function. 
• Medium-Term (2-5 Years): This window allows you to be strategic. Evaluate which family members or professionals might step into leadership roles. Begin their development now through mentorship, education, and hands-on experience. Rotate promising candidates through different areas of the family office so they gain broad exposure. 
• Long-Term (5-10 Years): Think about structural changes. Will your family office need to evolve as the family grows? Should you consider co-leadership models? How will you handle transitions between generations with different values and approaches? 

Document this timeline and share it with relevant stakeholders. People perform better when they know what you expect and when. 

Invest in Leadership Development Before You Need It 

The skills that built your wealth may not be the skills needed to sustain it. First-generation wealth creators often succeed through risk-taking and decisiveness. Later generations need different capabilities—collaboration, diplomacy, and systems thinking. 

Create individualized development plans for potential successors. These plans should include: 

• Formal Education: Financial management, investment principles, governance, and family business dynamics 
• Mentorship: Pair rising leaders with experienced family office professionals or outside advisors 
• Practical Experience: Give candidates real responsibilities with appropriate oversight 
• Peer Learning: Connect next-generation leaders with peers from other family offices 

Do not wait until someone needs to step into a role to begin their preparation. Leadership development takes years, not months. 

Address the Structural and Legal Foundation 

Your succession plan needs solid legal and structural underpinnings. Review these elements regularly: 

• Estate Planning Documents: Confirm that trusts, wills, and other documents reflect your current intentions. Verify that the right people hold fiduciary roles and that clear succession mechanisms exist. 
• Operating Agreements: Examine shareholder agreements, partnership documents, and family office governance structures. Do they facilitate smooth transitions or create obstacles? 
• Asset Titling and Valuation: Ensure assets are properly titled and valuations are current. Outdated valuations can create conflict during transitions. 
• Decision-Making Frameworks: Document how your family makes important decisions. As leadership changes, these frameworks provide continuity and reduce conflict. 

Setting Up a Family Office? Here are 8 Top Tips.

Sometimes family dynamics may affect the conversations that need to be had.  A neutral team of advisors with a lack of self interest can assist.  

– Kris Marney, Partner, Advisory

Navigate the Emotional Complexity with Care 

Succession planning is never purely technical. Family dynamics, identity, and emotion play enormous roles.  

You may face difficult realities. Perhaps your children lack interest in managing the family office. Or multiple family members want the same leadership position. Some rising leaders may not have the capability you hoped they would develop. 

Handle these situations with honesty and compassion. Engage outside facilitators when needed to guide sensitive conversations. Consider creating meaningful roles for family members who want involvement but may not be suited for executive leadership—board positions, committee chairs, or advisory roles. 

Remember that stepping back does not mean stepping away. Find ways for transitioning leaders to continue contributing their wisdom without blocking the next generation’s growth. 

Learn more about our Family Office Services

Work with BPM to Build Your Family Office Succession Strategy 

Succession planning requires both technical knowledge and deep understanding of family dynamics. You need advisors who can navigate both dimensions effectively. 

BPM works with family offices to develop comprehensive succession plans that protect wealth while strengthening family relationships. We help you assess your current situation, identify gaps, and create actionable roadmaps for smooth leadership transitions. Our approach balances the financial, legal, and human elements that make succession planning so challenging. To build a succession plan that preserves your legacy and prepares the next generation to thrive, contact us.