Wealth Managment Services

Clients &
Case Studies

Our clients are all successful individuals, families, and organizations. This diverse client base is primarily comprised of business owners, professionals, widows, and entertainers. Our clients are considered to be high net worth individuals.

 

How They Came To Be Our Clients - The vast majority of our clients have been referred to us by satisfied clients or by advisors who respect Capital Advisors' holistic approach to understanding and addressing the needs of our clients.

 

What They Want - Our clients want independent, non-proprietary based financial advice. They want objective, personalized financial solutions, not canned, "one size fits all" proprietary products. At Capital Advisors, each client relationship is unique. However, our clients have similar desires and expectations. They want us to provide objective financial solutions. They want someone they trust to provide financial planning advice in a personalized, service-oriented manner. Our clients want to develop a long-term relationship with an advisor they can trust.

 

We have created some unique methods for managing and funding the liabilities created by Buy/Sell Agreements, Non-qualified Executive Benefit Plans, and the estate taxes created by the success of our clients, who wish to conserve their estates. Although every client's needs are unique and handled differently, we offer the following hypothetical cases to illustrate how we may handle certain circumstances for potential clients.

  • Business Succession - Owner to Key Employees

    FACTS

    Sole shareholder of enterprise wishes to begin developing exit strategy.
    Shareholder desires to incent, reward, and retain key employees.

    ISSUES

    • Shareholder is ready to begin transitioning out of business.
    • Determine financial security needs of shareholder and spouse.
    • Determine valuation methodology to determine current and future value of enterprise.
    • When can shareholder and spouse retire? How dependent is overall financial security on income/sale of business enterprise
    • Examine vehicles to provide equity to key employees -- stock vs. “phantom stock."

    RESULTS

    • Examined cash flow/financial security needs of shareholder under several scenarios.
    • Determined retirement date and percent of enterprise to reward key employees for past service and percent that eventually will be sold to key employees.
    • Educated client on differences between stock and “phantom stock”.
    • Developed valuation methodology for use in “phantom stock” plan.
    • Recommended attorney to draft documents to formalize “phantom stock” plan.
    • Met with key employee group to explain the proposed plan and executed plan documents.
  • Business Succession - Equalization to Non-Employed Children

    FACTS

    Family enterprise with father as majority shareholder. Seeking to transfer business to children employed in enterprise and treat non-employed children in an equitable manner.

    ISSUES

    • Father is ready to transition out of business.
    • Father needs to maintain financial security. 
    • Financing and tax issues for all parties. 
    • Equalization to non-employed children. 
    • Ownership and control for employed children.

    RESULTS

    • Sale/gift of enterprise to employed children with favorable income, gift and estate tax implications to all parties.
    • Father achieves financial security while allowing enterprise sufficient cash flow for growth. 
    • Ownership and control issues resolved through agreements amongst shareholders while dealing with succession planning issues for next generation. 
    • Estate equalization accomplished through trust planning.
  • Business Succession - Second Generation Brothers

    FACTS

    Second generation brothers own majority of enterprise. One brother has some children in the business, the other brother has none (but some may desire to enter at a later date). Brothers wish to transfer shares to employed children only, while allowing for the fact that some children may eventually enter the business and some may exit the business. In the third generation the company is to be owned only by employed family members.

    ISSUES

    • Most tax-efficient way to make lifetime transfers of shares.
    • Defining qualifications for children to obtain ownership.
    • Methods of distribution of shares to employed children only and value to non-employed children in lieu of ownership.
    • Company control during both brothers' lifetimes, after one brother is deceased, and after both are deceased.
    • Financing the transfer of shares and the estate taxes associated with the transfer of shares or other property.

    RESULTS

    • Formal job descriptions and criterion were developed and communicated to family members outlining the requirements for share ownership.
    • Trusts were established to hold shares transferred during the second generations’ lifetime or at their death.
    • Through the use of voting certificates, control vests in the hands of those charged with running the enterprise.
    • Developed valuation methodology for use in "phantom stock" plan.
    • Financing methods were created for the enterprise to transfer shares.
    • Trusts were established to provide financial security for surviving spouses and the payment of estate taxes.
  • Business Succession - Movement Toward Management Owned Company

    FACTS

    Enterprise originally capitalized by many investors. Management’s original goal was to have the enterprise be a management owned company going forward. Enterprise is rapidly appreciating. Executives looking for way to compensate themselves beyond traditional salary methods. Management was concerned about “outside” shareholders’ interests.

    ISSUES

    • How to finance the repurchase of shares for all shareholders.
    • How to get shares into the hands of management only.
    • How to create a compensation structure to reward key management for their efforts that is commensurate with companies of their type and size.

    RESULTS

    • Developed a shareholder arrangement which addressed the issues of ownership, control and value and provided a funding mechanism to effectuate the transactions.
    • Implemented a deferred compensation plan, based upon industry standards, and created a funding vehicle for payments of benefits so that the next group of management would not be subject to funding the large liabilities created by the compensation plan and to provide assurances to plan participants.
    • Enterprise is now entirely closely held and transitioning to a new group of management.
  • Estate Planning

    FACTS

    Client with significant net worth wishes to minimize estate settlement costs and transfer assets to heirs while remaining financially secure during lifetime.

    ISSUES

    • Provide sufficient investment income to meet income goals.
    • Control of assets during lifetime.
    • Protection of assets so that only lineal descendants can benefit from the transfers.
    • Creditor protection for self and heirs.
    • Estate tax reduction techniques.

    RESULTS

    • Developed comprehensive cash flow model to determine financial security needs and investment portfolio design.
    • Implemented partnership arrangement to facilitate transfer of assets to children.
    • Established annual gifting program into partnership utilizing significant asset discounts.
    • Assets protection achieved through provisions of partnership.
    • Designed investment portfolio and asset allocation model to generate sufficient retirement income.
  • Financial Planning Process

    FACTS

    Retired executive dies very suddenly. Sizable estate is left to spouse. Spouse, who has never written a check before, is suddenly required to make all of the financial decisions.

    ISSUES

    • Estate and income tax issues relating to death of spouse.
    • Educate spouse so she can make educated financial decisions.
    • Financial security for spouse.
    • Develop estate and investment plan.
    • Integrate component parts into overall financial plan.

    RESULTS

    • Assisted spouse in the selection of an estate planning attorney.
    • Trusts were established to provide for the orderly disposition of spouse’s assets and to pay estate taxes.
    • Comprehensive cash flow model was developed to determine financial security needs.
    • Formal gifting program to children was implemented and integrated into estate plan.
    • Asset allocation model, based on stated risk tolerance was developed.
    • Portfolio allocations were designed and investment products were acquired.
    • Cash flow, estate and investment plans will be monitored on a continuous basis.
  • Personal Chief Financial Officer (CF0)

    FACTS

    Due to unforeseen events, husband is unable to make financial decisions. The husband, a business owner/executive approaching retirement, had served as the family CFO. The spouse now needs to fill the role of CFO, and make all of the financial decisions.

    ISSUES

    • Can spouse fill role of CFO or does she need to engage a "Financial Quarterback"?
    • Spouse needs to make immediate financial decisions.
    • Investment portfolio is spread out over 10 investment professionals.
    • Consolidation of investment assets and development of overall investment strategy.
    • Estate planning to address special needs.

    RESULTS

    • Educated spouse in understanding current financial situation.
    • Developed cash flow model to assist in making immediate financial decisions regarding company benefits and retirement plans.
    • Analyzed investment portfolio, consolidated investment assets into three investment managers.
    • Developed long-term investment plan for portfolio including allocation of excess cash flow to money managers.
    • Integrated investment and cash flow planning such that investment portfolio will provide sufficient cash flow when needed.
    • Met with clients’ other advisors –attorney and accountant.
    • Jointly developed estate plan with other advisors to incorporate trusts and partnerships into estate plan.
    • Monitor and report semi-annually on entire investment portfolio and quarterback integration of overall financial plan with other professionals.
  • Retirement Planning Process

    FACTS

    Husband and wife are contemplating retirement. He is an executive and has many options regarding his Company sponsored benefits. Client has previously done little estate or retirement planning.

    ISSUES

    • Determine when husband can retire.
    • Develop investment game plan for pre- and post- retirement years.
    • Financial security for both spouses.
    • Develop estate plan.
    • Integrate component parts into overall financial plan.

    RESULTS

    • Performed thorough analysis of Company sponsored benefits.
    • Cash flow model was developed to help analyze retirement options.
    • Several cash flow models were utilized to determine retirement date and optimal utilization of Company sponsored benefits.
    • Asset allocation model was developed for both pre- and post- retirement years.
    • Investment products were acquired to implement investment plan.
    • Estate planning was done via joint meeting with client’s attorney.
    • Cash flow, estate and investment plans will be updated and monitored on a regular basis.
  • Retirement, Cash Flow, and Investment Planning

    FACTS

    Client is selling his interest in company to Corporation and employee stock ownership plan (ESOP) Client requires income tax analysis regarding sale to both entities to determine most advantageous sale structure. Retirement income projections were required to determine income needs and investment portfolio design.

    ISSUES

    • Determine structure of stock transaction to Company and ESOP.
    • Tax ramifications of structure.
    • Cash flow analysis under various scenarios considering favorable tax treatment for stock sale to ESOP under IRS Section 1042 rules.
    • Income needs analysis to determine amount of principal necessary to produce adequate income during retirement.
    • Integration of new assets (sales proceeds) with existing portfolio holdings.
    • Development of long term investment portfolio for tax-deferred proceeds from sale of ESOP securities.

    RESULTS

    • A cash flow analysis was prepared to determine the sufficiency of income.
    • This analysis helped determine the asset allocation necessary to meet the eventual retirement income goals.
    • Portfolio allocations were designed and investment products were acquired to achieve the desired growth goals.
    • Portfolio will be re-allocated at retirement age to generate income to meet retirement income goals.
    • Researched and recommended investments for ESOP sales proceeds in accordance with IRS Section 1042 Rollover guidelines.