Guest Opinion: A Wealth Planning Guide for RV Dealers – RVBusiness – Breaking RV Industry News
Brad Stanek
EDITOR’S NOTE: The following guest opinion was written by By: Brad Stanek, Financial Advisor, CFP, Family Wealth Director, Executive Director of The Stanek Group at Morgan Stanley Wealth Management, Chicago, Ill.
Navigating the Peaks and Valleys: A Wealth Planning Guide for RV Dealers
Winston Churchill’s timeless wisdom, “Those who failed to learn from history are doomed to repeat it,” resonates deeply in the RV dealership industry’s recent roller-coaster ride. The last three to four years have been a financial whirlwind, with unprecedented highs followed by unexpected challenges. RV dealerships have witnessed the best financial years of their existence, but still, the current landscape demands a strategic approach to safeguard against potential pitfalls.
Despite the industry’s overall success, the year 2023 proved challenging and projections for 2024 are not overly optimistic. The cost dynamics between 2022 and 2024 units have triggered a race among dealerships to offload older inventory, leading to reduced margins. Compounded by floor plan interest rates surpassing 7%, dealers are grappling with curtailments that are negatively impacting cash flow and profitability. Some dealers, who may be unable to weather the storm, may be forced to close their doors.
The root of these challenges extends beyond the current economic climate. The preceding three prosperous years lulled some dealers into a false sense of security, leading to poorly timed investments and purchases. Whether expanding inventory, acquiring additional land, opening new locations, or indulging in personal luxuries, the assumption that good times would persist proved costly. When interest rates and curtailments rapidly took effect, many found themselves unprepared for the financial turbulence.
Looking ahead, the next 12 months may not offer immediate relief. Although the overall outlook points to interest rates cuts by the Federal Reserve in 2024, we believe profitability margins will improve nominallyPost-2022 inventory clearance could bring net profits back to pre-COVID levels of 3% to 5%. While better, it’s not the resounding success of previous years.
Amidst these challenges, a silver lining emerges. The surge in RV interest during the COVID era has introduced a wave of new customers to the RV-ing lifestyle. Anticipating repeat business and a surge in service demand for RV repairs, the industry can find solace in the potential for sustained growth. As people increasingly value experiences and embrace outdoor activities, the RV market is poised for continued expansion.
In the face of these uncertainties, the rallying cry becomes control what you can control. Both dealership operations and wealth planning must be firing on all cylinders to ensure long-term success. For many dealers, pitfalls have included cash flow struggles, over-reliance on their dealership and real estate for financial security, and insufficient protection against legal and financial threats.
The solution lies in assembling the right advisory team. A comprehensive lineup should include a CPA for tax preparation and cash flow consulting; an attorney to navigate legal complexities; an insurance agent for comprehensive wealth protection; and a financial planner to craft a proactive, well-coordinated wealth plan. Regular quarterly meetings should be conducted to review and adjust the written plan, identifying and addressing major initiatives to ensure adaptability in a dynamic market.
For RV dealers who are members of the RV Dealers Association (RVDA), an additional resource is available—the Second Opinion Service offered by our team, the Stanek Group at Morgan Stanley. This service, free and without obligation, offers a critical analysis of your existing plan, identifying gaps and areas for financial improvements.
In conclusion, the path forward for RV dealers requires a dual commitment: running a tight ship operationally and implementing a robust wealth plan. Learning from the industry’s recent history is imperative to avoid repeating past mistakes. As the wise Abraham Lincoln once said, “The best way to predict the future is to create it.” Now is the time for RV dealers to take charge of their financial destinies, so that they might leverage the available resources and expertise to navigate the road ahead successfully.
The views expressed herein are those of the author and do not necessarily reflect the views of Morgan Stanley Wealth Management or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
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Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters.
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For any potential forward-looking statements, there can be no guarantee that they will come to pass. Information contained herein has been obtained from sources considered to be reliable, but we do not guarantee their accuracy or completeness.
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Morgan Stanley Smith Barney LLC. Member SIPC. CRC 6124370 12/23
Source: https://rvbusiness.com/guest-opinion-a-wealth-planning-guide-for-rv-dealers/
