Wealth Advisors, Life Advisors
An established executive, our client had made a successful career at a company that had recently been sold to a private equity firm. Over time, his role within the company had changed and he became disillusioned with the direction the company was taking and with his job responsibilities. Emotionally, he needed a change. While, on paper, this client had a substantial net worth, most of it was tied up in stock and options in the privately held business.
Considering a one-year sabbatical, a career change or acquiring or starting a business, LAMCO was engaged to help build the necessary scenarios to gauge the impact of such a change. We built complete forecasts of our client’s options for redeeming his stock at a discount, the potential loss of income over a short to intermediate horizon, the capital required to acquire or start a business and the return that would be required on that investment to offset the temporary loss of income and forgone earnings on investments.
Ultimately, we determined that making any change would result in a financial setback that would be difficult to recover from, and instead helped our client devise a five-year plan that afforded him the structure he needed to remain emotionally engaged in his current position while building options that could provide him with a viable exit strategy.
Within two years, the private equity firm sold the business and the client received the maximum payout on his equity and options. Today, our client is financially secure and focused on investing his financial and intellectual capital in helping businesses reach their full potential.
For most of us, there comes a point in our lives at which we must make decisions, albeit tough ones, to best set ourselves up for future happiness. Making those decisions with purpose using robust, unbiased advice can help ensure the path you choose is the right one.
Looking Beyond Numbers to Build Security
Known for surpassing our roles as wealth and investment advisors, we were approached by a client facing several obstacles, both financial and personal. With an ailing husband, this client needed help budgeting her expenditures to ensure her financial future was sound, but also that she wasn’t sacrificing her current wellbeing for future financial security. We were challenged to look beyond numbers to not only build a sound financial plan, but also build emotional security and stability.
Her portfolio had been too aggressively positioned with her previous advisor and, as a result, her investments had suffered larger than expected losses. We repositioned her portfolio to reduce her risk and improve tax efficiency, and designed reporting that allowed her to feel in control of her portfolio.
We helped our client analyze her cash flow needs and identify areas for potential savings, listening to her as she explained the lifestyle she wanted and translating those goals, wishes and desires into an actionable plan. LAMCO built a support structure around her that allowed her to have her questions answered quickly and accurately by a tight-knit team of professionals she could trust, pacifying her anxiety with sound strategies and proven solutions.
Private wealth management is about more than just dollars and cents—it’s about understanding and truly caring about the financial and emotional wellbeing of our clients. For this particular client, LAMCO transcended the role of financial advisor, instead acting as a trusted and experienced sounding board for everyday life decisions, financial and otherwise. We were successful in helping our client stay on course through health and family challenges, understanding both the financial and emotional impact of these obstacles.
Sound Advice to Avoid a Life-Changing Mistake
Our client’s previous advisor had built a diversification plan that focused only on tax minimization, leaving our client vulnerable with a large portion of her portfolio in a single stock. Worried a lack of foresight might hurt her investments’ potential, she sought a second opinion and engaged the LAMCO team for our expertise in portfolio diversification and focus on long-term success.
We started by conducting a complete evaluation of the security and noted the historic volatility of the stock. We built a customized analysis to do this, which overlaid that client’s cash flow needs and objectives with historic volatility to demonstrate why the existing approach was not prudent. Finally, our team constructed a new strategy, which accelerated the diversification and established a liquidity fund to meet cash flow obligations for the next 5 years.
Within 9 months of starting this process, what every investor dreads happening, happened. The stock lost over 50 percent of its value. However, because of the collaborative approach followed, our client had diversified a majority of her exposure in the security and her lifestyle and objectives remained unchanged as a result.