Case Studies
PRIMARY GOALS:
- To finally figure out all of the different ways her tech firm employer was compensating her beyond her salary.
- To best utilize the discretionary income she had leftover after paying for her basic living expenses.
- To reduce the amount of taxes she was incurring by not understanding her equity compensation plan and the tax implications of each decision.
- To save for the down payment on her first house and figure out what type of account she should use.
THE CHALLENGE:
Joanne was making way more money than she ever thought she would be able to as a software engineer. She graduated only a few years ago and still has a decent amount of student loan debt to show for it. Now that she is officially "adulting" and recently engaged, she wanted to make smarter decisions with her money and begin to combine finances with her fiancé, who also had some equity compensation through his employer. Together, they would like to mitigate the tax impact of a joint household income that they know is quite high as they’ve never felt comfortable with the lifestyle they’ve become accustomed to.
She enjoys her work, her boss, and the flexibility to work from anywhere. Joanne truly believes in the mission of her employer.
Joanne was never taught any personal finance lessons throughout her formal education. She said that she "was super smart with computers, but not so smart with money."
The challenge is making sure she avoids unnecessary financial mistakes and helping her make more intelligent decisions with her money going forward. She wants to:
- Better understand the Restricted Stock Units (RSUs) and Employer Stock Purchase Plan (ESPP) she has access to
- Max out her retirement accounts while also paying off her student loans and saving for a house down payment with her fiancé
- Save for the week-long vacation she and her college girlfriends take annually
- Align her investment portfolio with her values, including environmental, social, and governance (ESG) screening
So, what's the problem?
Joanne is in a great financial position on paper, but she feels nervous and anxious about making any mistakes. She doesn't want to make the same ones she saw her parents make while growing up.
She is seeking an expert to help her better understand all of her choices pertaining to her finances.
She knew seeking out professional assistance would help ease her anxiety and give her more peace of mind now and in the future since she felt even small mistakes could have large negative consequences.
THE APPROACH:
The first step for Joanne was to sit down with a Fee-Only Financial Planner. She felt like her 401(k) guy from work was pretty "sales-y" and used a lot of jargon she didn’t understand, making her feel uncomfortable and more confused.
She needed to sit down and define her goals so we could put together a unique plan that would help align her finances with her values and goals.
THE RESULTS:
We sat down with Joanne, reviewed all of her benefits through her employer, and put it into context with her entire financial picture. We then reached out to her CPA, and together, we came up with a plan for withdrawing her RSUs and ESPP shares without increasing her tax rate.
The comprehensive plan we put together entailed the following:
- A tax-efficient withdrawal strategy to reduce concentration risk and improve returns
- Aligned her portfolios with her values of ESG
- Improved asset allocation to better align with her goals
- A savings account that she funded for her annual girls trip
- A plan for paying off her student loans
- A strategy for saving up for the down payment for her first house
We also utilized her Financial Plan online to help her aggregate and see all her and her fiancé’s accounts in a single location. With that tool, they could also run through a few
budgeting exercises, so Joanne knew where they were spending their money each month.
Joanne said she has a lot more peace of mind knowing that she better understands her financial situation and is excited to have access to professional financial advice when she needs it!
Note: The above case study is hypothetical in nature and does not involve an actual TCWS client. No portion of the content should be construed by a client(s) or prospective client(s) as a guarantee that he/she/they will experience the same or certain level of results or satisfaction if TCWS is engaged to provide financial planning and/or investment advisory services.
PRIMARY GOALS:
- To construct an optimal Financial Life Plan that would allow them to work on their own terms while concentrating on what they value most: traveling and experiencing the world with their children, attending their children’s extracurricular activities, and regularly donating to their church, favorite charities, and nonprofits.
- To best utilize their current savings and investments to create a comfortable and sustainable lifestyle now and in the future
- To reduce the amount of taxes they were unnecessarily paying and to keep more of their hard-earned money.
THE CHALLENGE:
Mike and Susan have never set “retirement” dates for themselves. It’s not because they can’t retire, but because they’re not sure when, or if, they actually want to stop working.
They both feel like they have done just fine financially until now but know they could be making smarter decisions with their money.
Mike runs a local non-profit, and Susan is a physician’s assistant. They both enjoy their careers and the flexibility their schedules allow. Their respective professions add purpose and meaning to their lives. They have both worked for decades in their particular fields and are not ready to leave their passions simply because society says they are nearing the traditional age of retirement.
The challenge is not overcoming their past financial mistakes or limitations as they’ve been doing most of the right things:
- Generating comfortable incomes
- Maxing out their retirement accounts and periodically adding to their other investments
- Growing a decent amount of equity in their primary home
- Protecting themselves with suitable types of insurance
So, what’s the problem?
Mike and Susan wonder if they are still missing something. Is their current plan right for them? What could they be doing better?
As they approach the next stage of life, they want an expert to help them make more strategic decisions with their money. They also wish to minimize the impact of taxes on their lifestyle in retirement
While Mike and Susan aren’t in a rush to retire, they want to know they will have the option.
THE APPROACH:
Mike and Susan were not sure where to begin, which is why they pursued professional help from a Fee-Only Financial Planner. They did not want to be sold financial products but rather get advice unique to their situation.
Plus, they’re pretty busy! They especially didn’t want to take the time trying to figure everything out on their own, given all of the recent tax law changes.
THE RESULTS:
When Mike and Susan hired us, they were concerned about more than just their portfolio of investments. They wanted help with their entire financial picture, especially taxes.
We put together a comprehensive plan that met all their needs, wants, and wishes:
- A tax-efficient investment strategy to reduce overall risk and improve returns
- Reduced investment costs
- Improved asset allocation to better align with their goals
- An intelligent, sustainable rebalancing strategy
- A plan for saving for their children’s education
- Reduction of tax liabilities through charitable giving, Roth IRA conversions, Social Security planning, and more
- A tax-efficient IRA funding strategy
They also utilized their Financial Plan online to help them see their entire financial life in one place, better organize their financial life, and gain more clarity.
Mike and Susan now enjoy the peace of mind that comes from having a clear financial plan. They now have more time and energy to dedicate toward the things they enjoy most — knowing they can choose to “retire” when the time is right for them.
Note: The above case study is hypothetical in nature and does not involve an actual TCWS client. No portion of the content should be construed by a client(s) or prospective client(s) as a guarantee that he/she/they will experience the same or certain level of results or satisfaction if TCWS is engaged to provide financial planning and/or investment advisory services.
PRIMARY GOALS:
- To find a Fee-Only, CERTIFIED FINANCIAL PLANNER™ (CFP®) to validate their current strategy and test whether or not they should consider other options. They ultimately wanted to know if they were making the right choices with their money so far.
- To figure out how to best help their three children pay for college or post-secondary education.
- To work with a Certified Exit Planning Advisor (CEPA®) to determine the current value of their business and work to increase its value for an eventual sale in the future, possibly to their children.
- Begin planning for Laura and Dale’s second act once they sell their business.
THE CHALLENGE:
Laura and Dale reached out to our office after being turned away by another large, well-known financial firm for not having enough "investable assets" for them to manage.
Unfortunately, like most financial firms, they only make money by managing assets or selling financial or insurance products.
They were frustrated and discouraged as they ran a successful digital marketing agency that allowed them to live a comfortable upper-middle-class life. While their "investable assets" were not substantial, Laura and Dale valued their company well over the account minimums they had been turned away for not having.
Up until this point, they felt their main challenge was finding a Financial Planner who would help them:
- Validate their current strategy and test whether or not they should consider other options
- Best help their three children save for and pay for college or post-secondary education
- Consider options for working remotely and traveling more
- Sell the family business to their children someday if they are at all interested in the future (Otherwise, sell to a third party)
- Understand how each decision would impact their ability to build generational wealth for their family
So, what's the problem?
As business owners, Laura and Dale did not have conventional 9 to 5 jobs with predictable incomes and employer benefits.
Their net worth was tied up in their digital marketing agency, so their finances were not nearly as simple as they used to be. They were in a complicated situation that required a unique strategy.
THE APPROACH:
Laura and Dale concentrated mainly on the current value of their business as the basis for their decision-making.
We proposed going through our EVOKE™ Financial Life Planning process to get at the root of what was most important to them before proposing any strategies.
Once we knew which aspects were deemed most important, we then discussed how accelerating the value of their business would allow them to capture a multiple higher valuation when the time to transition and ultimately sell their business eventually arrived.
THE RESULTS:
In working with Laura and Dale over a few months, we were able to dive deeper using our EVOKE™ Life Planning Process.
We put together a comprehensive financial plan that met all their needs, wants, and wishes, including:
- A plan for saving for their children's education
- A dedicated travel savings account
- An accelerated business valuation that allowed them to achieve their goals five years sooner
- A more flexible work situation that allowed them to work virtually more reliably
- Set up a Solo 401(k) Plan to help them save more towards retirement
Laura and Dale finally felt like they got the advice they so desperately desired without being solicited financial products or insurance.
They could rest easier knowing that by accelerating the value of their business, they'd be able to retire up to 5 years sooner than they were initially thinking.
Laura and Dale now enjoy the process of building their digital marketing agency as it will be the asset that will afford them the freedom to retire sooner than initially planned.
They will have more time to prepare for their second act once they sell the business.
Note: The above case study is hypothetical in nature and does not involve an actual TCWS client. No portion of the content should be construed by a client(s) or prospective client(s) as a guarantee that he/she/they will experience the same or certain level of results or satisfaction if TCWS is engaged to provide financial planning and/or investment advisory services.