Corporate Executive Transitioning to Business Ownership

Corporate Executive-Transitioning-to-Business-Ownership-01

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    • A marketing executive was starting his own venture after two decades with a multi-national firm. The complexity of this major life transition prompted him and his wife to seek professional advice, and a second opinion on their sizable investment portfolio.

    • The Situation

    • Senior executive transitioning to start a real-estate development business
    • Concerned with how this will impact the family’s financial security
    • Wanted help prioritizing expenses and establishing a realistic budget
    • Needed affordable financing to start his venture
    • Expected to fully fund college expenses for three children
    • Portfolio highly concentrated in U.S. equities

    • Our Approach

    • Helped define essential and discretionary expenses
    • Created a sophisticated financial plan to:
      o develop a strategy for immediate expenses
      o evaluate health of the long-term financial plan
      o conduct life and disability insurance needs analysis
      o conduct Monte Carlo analysis to stress test various economic scenarios
    • Established a margin account for flexible borrowing at a rate significantly lower than a bank construction loan
    • Switched existing college saving strategy from taxable accounts to tax-free 529 plans
    • Consolidated existing real estate debt into one lower interest mortgage
    • Rolled over $1 million from old employer’s retirement plan to an IRA in order to access more diversified investment options
    • Positioned the new portfolio for maximum tax efficiency by placing the bonds and alternative investments inside the IRAs
    • Converted over $120,000 in IRA assets to Roth IRAs over the two low income tax years before the business generated substantial profits
    • Established an Individual 401(k) for the new business once profits were generated

    • COLLABORATING WITH SPECIALISTS

    • Introduced client to a real estate attorney to create an LLC for the new business
    • Worked with a lender to establish a business line of credit and refinance the personal mortgages
    • Introduced client to a new accountant who specializes in small business owners
    • Consulted with an independent life and disability insurance agent to tailor coverage to the new needs of an entrepreneur
    • Introduced client to an estate planning attorney to create a comprehensive plan

    • SIGNIFICANT RESULTS

    • Sufficient liquidity and financing for the new business
    • Reassurance that they are on track for their planned retirement and long-term goals even with a change in career path
    • Increased confidence in ability to meet college saving goals
    • Robust team of professionals to address current and future planning
    • Well-diversified portfolio better aligned to meet their financial aspirations