What Is the Wealth Gap Diagnostic?
The Wealth Gap Diagnostic is Dew Wealth's proprietary assessment tool designed to quantify the difference between an entrepreneur's current financial position and the position the entrepreneur could occupy given income, business value, and career duration. The diagnostic measures this gap across six core dimensions: tax efficiency, asset protection, estate planning, insurance coverage, investment coordination, and business value optimization.
Jim Dew, CFP and Registered Investment Advisor, and Bryce Peterson developed the diagnostic as described in "Billionaire Wealth Strategies" (Chapters 1 and 3). The Wealth Gap Diagnostic was designed to serve as a controlled, proactive version of the $1 Million Wake-Up Call. Rather than waiting for a tax disaster, lawsuit, or estate complication to force an entrepreneur into action, the Wealth Gap Diagnostic creates urgency by estimating the cost of inaction, without the accompanying crisis.
The diagnostic provides directional estimates, not precise financial projections. Actual gaps depend on individual circumstances, applicable tax law at both the federal and state level, and the specific advisory relationships already in place. The assessment should be followed by detailed analysis with qualified professionals.
How Does the Wealth Gap Diagnostic Work?
The Wealth Gap Diagnostic evaluates each of the six dimensions independently and then calculates the aggregate gap. Each dimension connects to specific regulatory frameworks, tax code provisions, and financial planning standards.
What Does Tax Efficiency Measure?
Tax efficiency compares the entrepreneur's effective tax rate and total tax liability against the rate achievable through coordinated strategies. These strategies include entity optimization under the Internal Revenue Code (S corporation vs. C corporation election under IRC Subchapter S), retirement plan maximization under IRC Sections 401(k) and 415 (including defined benefit plans, cash balance plans, and profit-sharing plans), charitable planning under IRC Section 170 and Charitable Remainder Trusts under IRC Section 664, and income timing strategies.
The gap in the tax efficiency dimension often represents the largest single number, particularly for entrepreneurs who have relied on a competent but non-strategic CPA. The IRS reports that the federal income tax rate for the highest bracket is 37% (2025) under IRC Section 1, but effective rates can be significantly reduced through proactive planning within the DEAPR framework. The IRC Section 199A Qualified Business Income (QBI) Deduction alone can reduce effective rates on pass-through income by up to 20% for qualifying businesses, subject to income limitations ($191,950 single / $383,900 married filing jointly for 2024, adjusted annually by the IRS).
Tax savings estimates are based on general planning opportunities and may not reflect every entrepreneur's specific situation. Tax law changes frequently, and all estimates should be verified with a qualified CPA or tax attorney.
What Does Asset Protection Measure?
Asset protection evaluates whether the entrepreneur's wealth is properly shielded from lawsuits, creditor claims, and divorce risk through entity structuring, trust placement, and insurance layering. The diagnostic measures both exposed asset value and the probability-weighted cost of an adverse event.
Under the Uniform Voidable Transactions Act (UVTA), adopted in most U.S. states, asset protection structures must be established before claims arise. Transfers made with intent to hinder creditors or while insolvent may be voided by courts. State laws governing LLCs, trusts, and homestead exemptions vary significantly: Florida and Texas offer strong homestead exemptions, while other states provide limited protection. The ILATE framework provides the detailed assessment methodology for this dimension.
Asset protection planning involves inherent uncertainty because the effectiveness of any structure depends on the specific claims, applicable state law, judicial interpretation, and the timing of asset transfers relative to claims. No asset protection strategy eliminates all exposure.
What Does Estate Planning Measure?
Estate planning assesses whether the current estate plan reflects the entrepreneur's actual wishes, current asset structure, and current tax law. The diagnostic evaluates whether estate documents are current and whether the plan uses available tools to help reduce estate taxes and protect beneficiaries.
Under IRC Section 2010, the federal estate tax exemption is $13.99 million per individual (2025). The Tax Cuts and Jobs Act of 2017 (Public Law 115-97) doubled this exemption, but the increase is scheduled to sunset after December 31, 2025, potentially reverting to approximately $7 million per individual (adjusted for inflation). Entrepreneurs with estates above the potential lower threshold face particular urgency. IRS Treasury Regulation 20.2010-1(c) protects gifts made using the higher exemption from clawback after the sunset.
Many entrepreneurs discover that their estate plan was drafted years ago for a fraction of their current net worth and has never been updated to reflect the SECURE Act of 2019 (Public Law 116-94), changes in state estate tax thresholds (which vary from zero in some states to $1 million in Oregon and Massachusetts), or new family circumstances. The STEWARD framework provides the structured approach for closing estate planning gaps.
What Does Insurance Coverage Measure?
Insurance coverage identifies gaps between total exposure and total coverage across liability, property, life, disability, and key person policies. The Uncoordinated Advisors Problem is most visible in this dimension because multiple professionals may have touched the insurance portfolio without any single person maintaining a comprehensive view.
State insurance commissioners regulate policy terms, coverage minimums, and agent licensing within each jurisdiction. The National Association of Insurance Commissioners (NAIC) provides model regulations that most states adopt, but actual requirements and consumer protections vary by state. Coverage gaps often emerge at entity boundaries where the business attorney structured entities that the insurance agent was not informed about.
Insurance gaps represent quantifiable financial exposure, but the probability and timing of a claim cannot be predicted with certainty. The diagnostic estimates exposure in dollar terms based on the gap between identified risks and current coverage limits.
What Does Investment Coordination Measure?
Investment coordination evaluates whether investment decisions are being made in concert with tax planning, cash flow needs, and risk tolerance, or whether the investment advisor is operating in isolation. Under the Securities and Exchange Commission (SEC) Investment Advisers Act of 1940, registered investment advisors owe a fiduciary duty to act in clients' best interests. Under SEC Regulation Best Interest (Reg BI), broker-dealers must act in the client's best interest at the time of a recommendation. Under FINRA Rule 2111, recommendations must be suitable.
Despite these regulatory standards, coordination between investment and tax professionals frequently breaks down. The gap includes unnecessary tax drag from uncoordinated rebalancing, missed tax-loss harvesting opportunities, and asset location inefficiency (placing tax-inefficient investments such as bonds and REITs in taxable accounts instead of tax-advantaged accounts under IRC Sections 401(k) and 408).
Investment coordination improvements may enhance after-tax returns, but no investment strategy eliminates market risk or predicts positive returns. The Vanguard Group's research on "advisor's alpha" suggests that coordinated tax management alone can add up to 1.5% in net returns annually, though actual results depend on the investor's specific situation.
What Does Business Value Optimization Measure?
Business value optimization measures the gap between the business's current valuation and the valuation that may be achievable through the EMPIRE Value Framework. For business owners planning an exit within 5 to 10 years, this dimension often reveals the largest total opportunity.
Business valuations are estimates that depend on market conditions, industry-specific EBITDA multiples (which the International Business Brokers Association and various industry databases track), buyer appetite, and deal structure. The EMPIRE framework addresses the controllable factors that influence valuation, including earnings quality, management depth, intellectual property, recurring revenue, and customer diversification.
The diagnostic produces a summary score and a dimension-by-dimension breakdown that estimates each gap in dollar terms. The total gap figure represents the cumulative value that coordinated management may capture or protect over a defined time horizon. Actual results depend on implementation quality, market conditions, and legislative stability.
When Do Entrepreneurs Use the Wealth Gap Diagnostic?
Entrepreneurs use the diagnostic in four primary situations, each mapped to a different stage of the advisory relationship.
As a first step before engaging Dew Wealth: The diagnostic is available as a free downloadable resource, providing entrepreneurs with a no-commitment way to assess their current position. The self-assessment version uses standardized benchmarks from IRS Statistics of Income, Bureau of Labor Statistics (BLS) data, and industry-specific databases.
After a triggering event: Entrepreneurs who have experienced a tax surprise (such as an unexpected Alternative Minimum Tax liability under IRC Section 55), a lawsuit, or a financial disappointment use the diagnostic to understand the full scope of the problem and identify which dimensions need immediate attention.
During annual wealth reviews: Existing Dew Wealth clients use an updated version of the diagnostic as a scorecard to measure year-over-year progress in closing the gap across all six dimensions. Annual reviews also capture changes in tax law, including IRS revenue procedures that adjust contribution limits and income thresholds for inflation.
When comparing advisory relationships: The diagnostic provides a structured framework for evaluating whether a current advisor team is delivering coordinated value or operating in silos, measured against the standards set by the SEC, FINRA, the CFP Board, and state regulatory bodies.
How Does Dew Wealth Approach the Wealth Gap Diagnostic?
Jim Dew and Bryce Peterson designed the Wealth Gap Diagnostic to solve a specific problem: entrepreneurs who need coordinated wealth management but do not yet realize the scope of the gap. The diagnostic identifies where value may be captured, not to manufacture urgency where none exists. Entrepreneurs with small gaps receive that finding directly.
The diagnostic connects to the Wealth Mastery Matrix. After completing the assessment, the entrepreneur can identify which quadrant describes the entrepreneur's current state: The Ostrich (unaware of the gap and not acting), The Juggler (aware but attempting to self-coordinate), The Air Traffic Controller (getting results at high personal cost), or The Family Office (operating with a coordinated team and closing the gap systematically).
The Fractional Family Office® is positioned as the coordination layer for entrepreneurs whose diagnostic reveals a significant gap. The Fractional Family Office® provides the structure to address all six dimensions simultaneously. No single-discipline advisor can accomplish this alone, which is why the diagnostic measures coordination as a distinct dimension.
However, the Fractional Family Office® model involves advisory fees and is not appropriate for every entrepreneur. The diagnostic helps determine whether the gap is large enough to justify the investment in coordinated management. Dew Wealth makes the diagnostic freely available because the data consistently indicates that entrepreneurs with significant gaps value the insights enough to explore comprehensive solutions.
The diagnostic is an educational and informational tool, not a financial plan or investment recommendation. All findings should be reviewed with qualified financial, tax, and legal professionals before taking action.
What Are the Most Common Questions About the Wealth Gap Diagnostic?
How long does the Wealth Gap Diagnostic take?
The initial self-assessment version can be completed in 15 to 20 minutes and provides a directional score across all six dimensions. A comprehensive diagnostic conducted with Dew Wealth's team involves gathering data from existing advisors (CPAs, attorneys, insurance agents, investment advisors) and typically takes two to three weeks to produce a detailed report with dollar-quantified gap estimates and a prioritized action plan.
What if the gap is small?
A small gap means the current advisory team is doing an above-average job of coordination. Dew Wealth communicates this finding directly. The diagnostic is designed to identify where value may be captured, not to create pressure where none exists. Entrepreneurs with small gaps may benefit from periodic reassessment as wealth grows and complexity increases, particularly around legislative changes such as the Tax Cuts and Jobs Act sunset.
Is the diagnostic free, or is it a client acquisition tool?
The diagnostic is genuinely free and provides actionable information regardless of whether the entrepreneur engages Dew Wealth. The insights the diagnostic reveals, particularly the estimated cost of uncoordinated management, naturally lead entrepreneurs to ask how to close the gap. Dew Wealth is transparent about this dual purpose. No purchase or engagement is required to receive and use the diagnostic results.