High-level executive facing short-term cash-flow challenges and seeking comprehensive financial planning help.

Transitioning from generic brokerage accounts to personalized wealth management and retirement planning.

Successful entrepreneur and his spouse "living the dream," but facing complex financial challenges (and opportunities)

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High-level executive facing short-term cash-flow challenges and seeking comprehensive financial planning help.

Darren, age 52, had made a lot of good choices when it came to investing his significant income. As a high-level executive at a top pharmaceutical firm, he was making more than enough income to support his current lifestyle, and he was investing aggressively because the stock market had been doing well. He was maxing out his 401(k) plan at work, including keeping a sizable amount of employer stock in his plan to leverage the strength of his firm’s strong brand and name recognition. His company offered an incentive stock option program and employee stock purchase plan, so Darren took advantage of these as well, accumulating options and purchasing stock at the reduced rate, rapidly increasing his financial interest in the company. To minimize his annual tax bill, he was deferring a large percentage of compensation and making the highest possible contribution to his IRA plan. Lastly, Darren had been doubling up on his mortgage payments to be “free and clear” as soon as possible.

On the surface, it looked like Darren had made all the right choices with his money. But when Darren came to us for help, things weren’t going as well as he’d expected. The company had experienced one, then another, market disaster. Within less than 12 months, two of the firm’s major drugs had been pulled from the market, resulting in a dramatic stock price decline. Coupled with a decline in the stock market due to geopolitical issues, the value of Darren’s 401(k) plan, employer stock, and stock options were simultaneously cut nearly in half. Worse yet, the decades-old company filed for bankruptcy, so not only was the value of the investments inside his deferred compensation plan going down, the entire deferred compensation program was at risk—along with his job and the high salary to which he’d become accustomed. Because he had been using much of his cash to pay down his mortgage, he didn’t have much available to fall back on. He suddenly found himself in a position to which he wasn’t accustomed: he was worried about his finances, including his ability to pay his immediate bills, maintain his current lifestyle, and stay on track toward his retirement goals.

We began helping Darren by completing a financial plan to get a detailed analysis of where he currently was and where he wanted to be in the future. Next, we diversified as many of his assets as possible out of the company and reinvested them in a combination of tax-deferred, tax-free, and taxable accounts. We showed him how reducing the contribution amount to his 401(k) actually would benefit him in the long run, and then took the additional assets and reinvested them in a managed portfolio. Darren was optimistic that the company would bounce back, so he opted to leave 50 percent of his vested options in place, and we reinvested the other half in lower-risk and more diversified investments. We also developed a sophisticated stock-option exercise program to allow him to systematically reduce the balance of his options over a long period of time in alignment with his tax situation and retirement goals. Following our recommendations, he also pulled out of the deferred compensation program—at least for the time being—and cut back on his mortgage payments, paying only the regular monthly payment to protect his cash flow and build up other cash reserves.

The good news is that Darren’s company did bounce back—though not to the level of success it had seen in the past. But even if the company had gone under, Darren would have been in a comfortable position. By implementing the creative solutions we developed, he would have enough cash flow to maintain his lifestyle until he was able to secure another executive position, as well as a much greater level of protection for his accumulated assets. As we move forward together, we continue to review and rebalance Darren’s investments to help guide him toward the best possible long-term decisions, no matter what the future of his company—or the stock market—holds.

Transitioning from generic brokerage accounts to personalized wealth management and retirement planning.

Bill, age 70, had spent most of his life on a boat. But due to some recent health issues and the fact that his children had moved away from the area, his yacht was sitting idle much of the season. It was, regrettably, time to sell. When it came time to reinvest the money from the sale of his boat, Bill first contacted his broker at a big-name financial institution. While he had existing accounts with the broker, as Bill listened to the investment approach and researched the firm’s historical investment results, he became more and more convinced this wasn’t the best option. When he shared his concerns with his friend Tom, they began talking about the differences between commission-based advisors and fee-only fiduciaries. Once Bill understood that an independent fiduciary must always act in the client’s best interest, he knew it was time to make a change.

When Bill came to us, he asked for advice on investing the proceeds from the sale of his yacht, and for our recommendations regarding his investments with his broker. On taking a closer look at his current accounts, we saw his assets were split into five different investments. But the broker had missed a lot. Even though his assets were divided among five different mutual funds, four of the five funds were invested in the same large names, so there was almost no diversification of Bill’s portfolio. Having been sitting idle in these funds for years with no proactive account balancing, these investments were not coordinated with current economic conditions and, when we projected how they would perform under a number of different market scenarios, we discovered that the risk of loss was much larger than Bill was willing to accept. Even if Bill had been much younger, the proposed risk wouldn’t have been appropriate.

Working closely with Bill, we talked through his options and our recommendations, considering his age, his retirement goals, and some of the things he wanted to do now that he had sold his yacht, including some extensive travel. We put together a detailed retirement income plan that took into account his short- and long-term cash-flow needs, and then reinvested his mutual fund investments and invested the proceeds from his yacht to match the plan. By using the approach we recommended and investing his assets in risk-appropriate, globally diversified, tax-efficient funds, Bill’s portfolio now has a higher expected return, with lower risk. And by adhering to his customized retirement income plan, he’s been able to reap the benefits of the sale of his yacht, turning his favorite pastime of boating into a newfound passion for traveling with his grandson in tow.

Successful entrepreneur and his spouse "living the dream," but facing complex financial challenges (and opportunities)

When Art and Laurie became our clients in 2002, they were at a turning point in their lives. A successful entrepreneur, one of Art’s ventures had been acquired 10 years earlier, resulting in a significant boost to the couple’s finances. The timing had been ideal, giving them an influx of cash that enabled them to pay for their two sons’ college expenses, as well as realize their lifelong dream of owning a yacht—a 59’ Marquis. They had invested the remaining assets from the sale of the business in a variety of investment accounts, including investing a sizable chunk of money in a top-performing, very exclusive hedge fund. As an executive at the firm that acquired his own company, Art also had taken advantage of a generous 401(k) match, investing the maximum allowed amount of his salary over the past 10 years. With all of the groundwork complete, it was time to get ready for retirement.

In preparation for Art’s retirement, we began by working with Art and Laurie to create a detailed retirement income plan, using a combination of investment management, wealth management, and tax strategies to help protect their assets and ensure sufficient cash flow to support their lifestyle throughout their retirement years. When we looked closely at their existing investments, we saw a concerning lack of diversity. In particular, too much of the couple’s wealth was concentrated in the much-touted market fund at Bernard L. Madoff Investment Securities LLC. And while we had no way of knowing that they were invested in what soon would be infamously known as the Madoff Ponzi scheme, we did know there was an extremely high amount of transactions resulting in very high taxes on the investment to Art and Laurie, the investment management expenses were high, and the performance numbers sounded too good to be true. We advised them to reinvest their assets elsewhere. The result: 6½ years before the Madoff scheme fell apart, all of Art and Laurie’s assets had been withdrawn from the fund. They were able to retain 100% of their investment and due to the timing of the withdrawal they weren’t subject to the clawback provisions that devastated many victims of the scheme. Using these assets, we balanced their existing portfolio, focusing on a managed portfolio of global diversification and a carefully structured mix of tax-deferred, tax-free, and taxable accounts. When the time came for Art to retire, we rolled over his 401(k) savings into an account that provided him significantly more control and flexibility over the investments. We then created a detailed retirement income plan designed to minimize taxes while allowing a predictable stream of income that will increase over time as his expenses increase with inflation. We determined the correct Social Security payment structure for them, and we implemented an investment plan that allows for growth while also providing protection so no sleep is lost when the markets—and Art and Laurie’s monthly account values—go through inevitable temporary declines.

Today, Art and Laurie are able to enjoy a comfortable retirement without worrying about their short-term cash flow or their long-term financial security. When unexpected expenses do arise, we work together to determine how, and from where, to best pay for those expenses to meet their needs—always keeping an eye on maintaining an optimal level of assets to maintain their retirement goals, no matter what the future holds.

Get in touch today for a consultation.




(203) 922-1192