“How to build wealth” will never stop being a hot topic—especially considering the plethora of financial professionals who promote themselves as wealth advisors and increasing widespread use of nomenclature like “the 1%” and “mass affluent.”

But regardless of what constitutes the threshold of wealth, if the focus turns to long-term savings and retirement accumulation, the key objective is after-tax returns—also known as “the effective return.”

Ever since the ratification of the 16^th Amendment to the Constitution in 1913, U.S. residents have had to bear in mind the tax code when building wealth. Now, the world’s wealthiest people create their wealth through successful companies like Microsoft and Facebook, where wealth is associated with ownership.

Agency principals who share in ownership have two major paths to accumulating savings and wealth.

The first option is investing disposable income in mutual funds, real estate and more. It’s important to note in addition to saving through a company-sponsored retirement plan or IRA, this route involves paying ordinary income taxes on earned income and then investing.

The burden of income taxes has increased for many successful small business owners due to the return to higher income tax brackets, the tax instituted by the Affordable Care Act and recent state-specific financial pressures that have prompted states like California, Oregon and Illinois to raise their state income tax rates—which adds to the total tax burden for residents of those states. Taking into account the payroll Medicare tax—the portion of FICA taxes that are not capped—many agency principals are paying a marginal income tax rate in excess of 40% or even 50% in some cases. Accumulating the requisite amount of savings to provide a comparable standard of living in retirement on an after-tax basis will require wise, long-term investments.

The second option available to agency principals is investing in their agency with the income they could have otherwise taken as compensation. Diversification considerations aside, this is a much more effective strategy. Why?

Since the sale of an agency is subject to capital gains taxes and not income taxes, owners can realize 76 cents on the dollar for federal taxes. If the agency’s growth rate mirrors comparable investments, agency owners should refocus on the growth of their business—not just a cash-flow generator. In order to achieve a healthy organic growth rate, agency owners must invest in technology, social media and digital marketing and attract talented people to join the agency. Agencies should also consider carrier co-op programs to help contribute to investment in the agency.

A third option exists for agencies with at least $1 million in revenues: sponsoring an ESOP, which transfers the ownership of agency principals on a tax-favored basis. Because it allows the seller to defer the gain and invest the proceeds in the securities of publicly traded companies, an ESOP is also an efficient vehicle for acquiring other agencies.

Not all agencies are good candidates, and ESOPs involve set-up and administration fees, but agencies in the right revenue category should always discuss whether an ESOP is a viable option.

Dave Evans is a certified financial planner and an IA contributor.