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Investment Strategy for a Corporate Executive

Background

A married 57 year-old with three children was an executive for a fortune 500 company. His net worth was $12 million, $3 million of which was in restricted stock and $5 million of which was in other liquid investments. He was a sophisticated investor but knew he couldn’t do it all by himself. He had concerns about the stock market and the fact that his company stock was near its all-time high.

Client’s Objectives

  1. Confirm that he was on track to retire at age 65 with sufficient money for him and his family to live comfortably for the rest of their lives.
  2. Determine how best to invest his money while protecting himself from the risk of a downturn, especially in his restricted stock.
  3. Provide a college education for his five grandchildren.
  4. Protect all assets for his wife should he pass away prematurely; and ultimately protect all assets left to his children and grandchildren from creditors and a potential divorce.
  5. Avoid probate due to the unnecessary publicity it can cause.

Solution

  1. Use financial modeling to confirm that they have sufficient funds to accomplish their life goals with a portfolio allocation they are comfortable with.
  2. Globally allocate all investment assets earmarked for retirement, which could include the restricted stock, 401k, IRA’s and taxable investments.
  3. Utilize stock options to limit the downside risk on his restricted stock.
  4. Establish savings plans earmarked for college for the five grandchildren.
  5. Establish estate documents that could help avoid probate and provide asset protection for the surviving spouse.
  6. Create a trust (or trusts) for their children that could be protected from creditors and divorcing spouses.
CASE STUDY FOR ILLUSTRATIVE PURPOSES ONLY. NOT AN ACTUAL CLIENT.

CLIENT CASE STUDIES