Case Studies

Case Study #1: Technology Professional who had a liquidity event

This couple approached us prior to their employer’s IPO saying they needed someone to make sense of the financial impact of the event. Their primary concerns were how and when they should exercise/sell stock, how they should plan for the associated AMT taxes, and how they can strategically diversify their wealth given that most of their net worth was going to be in just one stock. They also were thinking about buying real estate with some of their newfound wealth. They wanted to understand what they could afford and what made sense for them given their long-term goals. 

After hearing out their specific goals and needs, we first helped them devise their stock option sale strategy. We also referred them to a CPA who is very familiar with AMT taxes, and we got on collaborative calls where the CPA modeled out, in real-time, a few different exercise and sale scenarios that we were considering. Once we had an idea of the tax impact of what we were going to do, the clients proceeded with executing on the stock option strategy. This allowed them to diversify out of their company stock. Next, we developed an investment strategy where we invested their funds in a combination of stocks, ETFs, and real estate that we hoped would work towards their growth and passive income goals. Finally, we also modeled out a home purchase analysis for both a primary residence as well as investment property hoping to understand their budget for a home and the appropriate rent to charge.

Case Study #2: A young couple with a baby and just starting out

We met this couple just after they had their first child. They were extremely busy with work and parenting, and knew they needed to delegate their financial planning responsibilities to someone who would be proactive about it. This couple knew they had to make some changes and decisions now that they had a kid, but they needed some guidance on what those things were and what their options were. They highly value education and knew they wanted to set aside some money for their child’s education but were unclear on the amount and for how long. They also wanted to have a plan in place for their child if something ever happened to them. 

The first need TPWA addressed was helping them determine what they could afford to do financially given that they had more costs with the new addition to their family. Specifically, we put together a cashflow statement that clearly showed them their incomes, their expenses, and the new expenses that came along with having a child (i.e., hiring a nanny). That exercise then showed us what amount of money was left over and could be used to address their other goals. We next estimated how much money they would need to set aside each month between their baby’s birth and the time they expect their child to go to college. We discussed their options for investing in a 529 plan as well as a brokerage account that would be earmarked for their child’s education. We educated them on the beneficial tax treatment of 529 plans. Ultimately, we helped them open college funds and determined the appropriate monthly deposit. Once we had addressed their college education goals, we then helped them put together a plan to help their child if something happened to the two of them. Specifically, we referred them to a trusted estate planner who set up their estate documents such as trust, will, and guardianship forms. Lastly, we helped them obtain life insurance coverage in the appropriate amount required to see their child to adulthood if anything were to happen to them.

Case Study #3: 40-something couple with the kids, the cars, the house and looking towards retirement

We met with a couple who had some of the basics of their financial planning already down. They were already maxing out their 401(k)s. They had already purchased their forever home. They already had a stock plan through work that they were contributing to. For this couple, the main pain points were funding their kids’ future education as well as saving for their retirement. They had already accumulated substantial market-based investments and they were interested in diversifying into other assets.

The first thing we did was help them add the appropriate amount of money into their kids’ college funds on a monthly basis. They were able to fund those contributions through their cash salary and cash bonus. Then, to help them prepare for retirement, we determined a monthly savings goal. They also had a large sum of money in their employer’s stock plan. To diversify them out of that asset, we outlined a stock sale strategy that was aimed to reach their diversification and tax strategy goals. Next, we developed an investment strategy placing their funds into income-generating real estate investments, which were a combination of REITs and some physical residential property that they rented out and managed themselves. 

Case Study #4: Pre-retirees/retirees 

This couple was already confident that they had saved enough for their retirement and approached us needing a strategy on what to do with all their accumulated assets. More specifically, they wanted to know a.) how they could draw an income from their investments in retirement in an efficient way, b.) plan out the future transfer of their assets to their children, and c.) give some of their wealth to a couple of non-profits they were closely involved with. 

The first thing we did was identify their monthly income needs. We then outlined a plan for them to start the withdrawals on their IRAs, social security, and investment portfolio to help support this monthly income need. The next thing we addressed was determining what type of support they wanted to provide their children with. They said they would like to pay for their children’s weddings in full, pay for a down payment on a single-family home for each, and also set aside a years’ worth of college tuition for their future grandchildren. We created separate accounts that were earmarked for each of these goals and started moving resources into them from their existing investment assets. Because the total amount being given to their children was under the lifetime gift exemption, we did not need to employ any advanced estate planning strategies. Finally, we set up a donor-advised fund for the couple to address their charitable giving goals.

**The above are hypothetical situations based on real life examples. Names and circumstances have been changed. The opinionsvoiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your financial advisor prior to investing.

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