A relatively new client couple unexpectedly had one of their companies purchased by a larger competitor. At the transactions closing in a few months, all restricted stock and stock options accumulated over years would vest immediately. The clients were looking at a big tax bill and a large amount of new assets. They wanted to know options for reducing taxes and how to best handle the large amount of cash they were to receive.
We realized investment losses where possible to offset some of the new gains from vesting. The clients were involved in non-profit work and philanthropy. Proceeds from the stock vesting provided an opportunity to fund a Donor-Advised Fund (DAF). The DAF could be used for current and future charitable giving. The DAF was funded by year-end which offset some of the taxes. The accountant also had the clients pay estimated taxes to avoid a big tax bill at filing time.
We invested the remaining assets in their current portfolio model. The influx of assets accelerated their philanthropic goals and planning for an early retirement.
A new client couple both had high level jobs at their companies. They had significant savings of almost $4M in both taxable and company retirement plans. Like most working professional couples, they told us they were short on time. They said they struggled with completing planning on their own and having the time to do everything. Their kids’ college education was already funded. But they told us they were unsure how much risk they had to take in their investments to reach their retirement goals. They were unsure if they were maximizing their company’s benefits.
We worked with them in verbalizing all their long-term financial goals of retirement, a potentially relocation, and a vacation home. We aggregated all their account information. An analysis was conducted on how to reach their goals with different asset allocation models. We determined a plan by which they might be able to meet their goals with taking less risk than they realized. We consolidated all their taxable holdings. We also determined that more income could be deferred into a pair of executive retirement plans at one of the companies.
The clients now have their accounts consolidated, an investment plan in place, and, we believe, company retirement plans and benefits are maximized.
A business owner approached us for a second opinion on his investments. He had two different long-term advisors, one had been used by the extended family for decades. He told us he was uncertain if the investments were appropriate and did not understand some of them. Also, he only received investment advice from the advisors with little financial planning. He said he wasn’t even sure if he was on a solid path for retirement or when he could retire. He told us he felt it was time to move on from basic investment advice to a firm accustomed to handling a $1M+ portfolio with complex financial planning.
We provided an overview of investments for both advisor accounts. There were many conversations discussing each investment and the potential and risk of each one. He decided to become a client by initially transferring one of the advisor accounts to our firm. We laid out a plan for divesting immediately from some investments while waiting for redemption fees to expire on others.
A full financial plan was created for the client and his spouse. The plan included retirement projections, college savings, risk insurance coverages, a potential vacation home, and the initiation of a company retirement plan. We also set aside over a year’s income for emergency savings due to the cyclical nature of his industry. Over time the client decided to transfer all assets because of the comprehensive financial planning, transparency of fees, and understandable explanations of investments. He said he felt he “graduated” from basic advisor advice to a more sophisticated full financial planning firm.
We believe he and his spouse are now on a better path for fully funding college for their kids, an early retirement, and a potential second career.
An unexpected widow in her 40’s came to see us. She seemed upset and overwhelmed about her finances and current situation, which was understandable. She said she lacked trust in her current advisor. She told us he was unsympathetic to her situation and seemed only interested in what new investments he wanted her to buy. She received a substantial life insurance payment plus had retirement accounts to reregister. Her accounts were scattered across many programs, custodians and investments. She said it was confusing and complicated for her to understand and track and she wasn’t even sure of the exact dollar amount of her investments. She was trying to figure out the best course of action for the remaining cash and current investments. She told us her biggest concern was that the assets had to last the rest of her life and still provide for her kids’ needs today. She said her faith in her current advisor was low and she was unsure where to turn.
When she became a client, our top priority was to listen. We started a dialog and gave her a voice for her fears, goals, and what would constitute a successful working relationship. We spent a lot of time researching her accounts, identifying assets and educating her on what she owned. We then explained the risks and benefits of each investment, as we saw them, and how we thought each could help or challenge the attainment of her goals.
After discussions, we put together a plan for current cash flow needs and how to consolidate accounts, diversify assets, streamline paperwork, and fund college for the kids. It took a few years to unwind and consolidate some of the investments. When we meet, we update her on the status and value of each.
We are very pleased that we have established trust and open communication in our relationship. We believe she has confidence and knowledge in her investments and future goals. And most importantly, she is now focused on moving forward and looking toward the future.
These case studies are provided by Robinson Smith Wealth Advisors, LLC (“RSWA”) for illustrative purposes only, to provide examples of our investment process and methodology. Past performance is no guarantee of future results. The results portrayed in these case studies are not representative of all of RSWA’s clients or all of RSWAs clients’ experiences. Different types of investments involve varying degrees of risk, and actual results may vary materially than those portrayed herein. Therefore, it should not be assumed that the future results of any specific investment or investment strategy (including the investments and/or investment strategies recommended or undertaken by RSWA) will be profitable or equal the results portrayed herein. An individual’s experience may vary based on his or her individual circumstances and there can be no assurance that RSWA will be able to achieve similar results in comparable situations. No portion of these case studies is to be interpreted as a testimonial or endorsement of RSWA’s investment advisory services and it is not known whether the clients referenced approve of RSWA or its services. The information contained herein should not be construed as personalized investment advice. Please contact us for additional information with respect to the strategies and/or investments described herein.
RSWA does not employ any licensed tax advisors or CPAs or any licensed insurance professionals. The material provided is for informational purposes only. We may make recommendations regarding tax planning but you should always seek the advice of a licensed tax professional concerning the application of tax laws to your current situation. We may make recommendations regarding insurance but it is your responsibility to seek out your own insurance provider. If we recommend a tax professional or an insurance provider to you, we receive no referral fees or non-monetary benefits for making that recommendation.