Client Journey: Heading Toward Retirement
Moment in the Journey
A married couple in their late fifties came to The Colony Group after having received a large inheritance consisting of shares of a single publicly traded stock as well as a distribution of shares of the same stock from a trust established by a family member. With two careers, comfortable incomes, and one grown child, they were focused on their ability to retire and still give back to various charities. Overwhelmed by the multitude of investment options available to them and how those options were impacted by the nature and magnitude of their newly acquired stock, the couple turned to The Colony Group for guidance.
The clients’ primary concern was the significant risk associated with a portfolio essentially consisting of one stock, which they were hesitant to sell because of their belief that the sale would incur a large capital gains tax.
Highlights of the Journey
The Colony Group began by exploring and developing the clients’ objectives, and educating them about the various options available for them to achieve their goals. This included:
- Structuring a portfolio that was intended to grow over time and generate sufficient income to permit them to retire and travel. The portfolio strategy also needed to accommodate the capital requirements of periodic real estate purchases.
- Developing an investment policy by analyzing the couple’s projected cash flow needs in retirement and employing sophisticated financial modeling to illustrate the risks and potential returns of various investment strategies.
- Satisfying the immediate need to diversify by selling 25% of the inherited single-stock and reinvesting the proceeds into a balanced portfolio.
- Creating a charitable remainder unitrust (a “CRUT”) which permits the clients to retain an income stream from the trust’s portfolio and enjoy tax-efficient diversification.
- Assisting in the donation of stock to a newly created private foundation, which enabled further funding of the clients’ charitable gifting strategy in a tax-efficient manner.
The Journey Goes On
The Colony Group meets with the clients periodically to review their portfolio and, if necessary, adjust their investment allocations as their risk preferences or wealth circumstances change over time. In addition to detailed reports on each account, The Colony Group provides regular reporting on all of the clients’ assets in multiple accounts on a single consolidated family statement, bringing clarity to the overall investment plan.
These case studies are based on actual events in which certain of The Colony Group’s counselors were involved and were selected to represent a cross section of client situations that The Colony Group has encountered. All clients have different and unique circumstances and needs, and what may have been the appropriate solution for one particular client may not be the appropriate solution for your particular set of circumstances. There can be no assurance that The Colony Group will be able to achieve the same or similar results in comparable situations.
Please note that these case studies were prepared without client input and should not be construed as an endorsement or statement of the client’s experience with The Colony Group.