Note: These are hypothetical scenarios and do not involve any Kinetix clients
Mike and Anna have been extremely successful with their careers. Money hasn't been a big topic over the nine years they have been married. They have been able to spend and live comfortably while saving for their future. Mike has worked at his current company since they were a small startup. He has watched the company go from “chaos” to publicly traded. He was able to navigate the company IPO but felt like he missed out on opportunities.
Anna has worked for a few different employers, but for the last five years, she has enjoyed her work as a lawyer at a local law firm. Over half of their compensation comes in the form of stock from Mike's company. He hasn't planned much for the equity, so it has created a large position in company stock. About 70% of their total investment portfolio is employer stock. Anna receives a salary with an annual bonus at the end of the year. However, her employer just adopted a new 401k plan, and she is unsure if and how much to begin contributing. She loves her work but wants to become self-employed in the next 5-7 years so she can ditch the 9-5.
Despite feeling comfortable about their finances, Mike and Anna understand that a large amount of their financial picture hinges on company stock. Mike's current income is based on his company and so is a large part of his investment portfolio. As a result, they are feeling anxious that so much is tied to one company.
Other than maxing out Mike's 401k, they are unsure how much they need to invest, where to invest and how to prioritize their financial goals. They also have a large amount sitting in cash and are unsure how to utilize it. They have always wanted a ranch, but it seems out of reach with the other goals they want for their family. Travel and experiences are very important to both of them before the kids are in college.
We created a cash flow plan for their regular salaries. This would fund their lifestyle, and some long-term investment accounts.
We created a plan for Anna's annual bonus. This would fund their annual family vacation for the next year. We created an additional strategy for Mike's equity compensation to allow for creative tax planning and reduce concentration. This funds Mike’s hunting/fishing trips, and the rest accelerates their investment goals. We reduced Mike's large company stock position. We showed him the tradeoffs of diversifying the stock vs. using 50% of the proceeds for the ranch goal. This gave him the confidence to pull the trigger on the ranch of their dreams. Two years sooner than planned! All while staying on track for their other goals.
We educated and helped Anna get started on her 401k plan. We helped with her asset allocation as well.We uncovered that Mike had an employee stock purchase plan he wasn't participating in. So we had him sign up to maximize cash flow. We funneled funds through the ESPP and back into their cash flow to fund education accounts for each child. Mike and Anna now understand how their equity works within their financial plan. Now that they have a plan, it makes things much easier when we need to make a pivot as life changes, which happens often. Their family regularly enjoys visiting the ranch. They are even considering adding a few cabins for short-term rentals! We will add this to their plan and guide them through this goal!
They can now make confident financial decisions and not worry about negatively impacting their long-term financial goals.
As part of our ongoing phase 2 planning, Mike and Anna receive an updated tax and equity projection, so we know exactly what to expect and if we need to make any strategy adjustments. They also receive a one-page plan to see exactly how they are progressing and the next steps. They now have the confidence to use the money to enjoy things they value, while their long-term investments are working towards financial independence.
Occupation: Rental Property Coach
Top financial concerns:
• No system to manage cash for business and personal
• Want to invest money outside of business and get a retirement account setup
• Ensure proper insurance coverage for business and personal
• Knows there are blindspots and trouble staying accountable
• How much can I afford to pay for some of my wedding next year
• Set up a cash management and tax plan
• Set up investment and retirement accounts
• Create financial flexibility, not just traditional retirement
• Grow business value to sell in the future
• Budget for a wedding next year
Statement of financial purpose
Become financially independent, not in the traditional retirement sense, so I can choose how I want to spend my time.
Emma has been an entrepreneur for four years. Her solo business has been steadily growing, and she wants to ensure she is taking advantage of higher income years. She had never talked to a financial planner and, as a successful entrepreneur, always did things herself. She likes being in control. She has been reading tax and investing strategies on Google/ Youtube. The knowledge is great, but it's not helping her apply it to an actual strategy for her situation.
She is hitting a wall in her business, and there isn't enough time to DIY the personal and business financial planning. She feels that delegating some tasks will allow her to spend more time (and less hassle) growing the business. She also has a fiancee, Eric, and will get married next year. She wants to make sure her financial plan addresses this important milestone without impacting her long-term goals.
She is hitting a wall in her business, and there isn't enough time to DIY the personal and business financial planning. She feels that delegating some tasks will allow her to spend more time (and less hassle) growing the business.
She also feels overwhelmed with the upcoming wedding next year and wants someone to guide her through making financial decisions and keeping her accountable.
Created a no-budget personal cash flow plan where she pays herself first. She auto funds her investment/priorities/goals first, then spends the rest! Set up a designated “Wedding Fund” account that she funds with auto contributions. This keeps her within a comfortable budget for wedding expenses. Helped her put together a (and prepare ongoing) cash flow forecast for the business. This allows her to make better money decisions and increase the value of the business.
Reviewed current business strategy and created a tax plan projected to significantly reduce lifetime tax. We worked with their CPA to make sure we are all on the same page.
Analyzed the best type of retirement plan for her situation. We then established a retirement account and brokerage account to balance mid-term flexibility with long-term growth outside of her business. Built an asset allocation across all investment accounts to meet her financial goals and help her understand what she is investing for. Reviewed insurance policies (personal and business), found coverage gaps, and referred this to a trusted agent to get policies in place. (As a fee-only firm, we don't receive commissions for insurance products).She now has a ton of confidence in where she is heading financially. As a result, she has more time to focus on the business. We have regular meetings and check ins to ensure we are staying on top of Emma’s plan, looking for opportunities, and providing accountability.
When anything financial comes up, we collaborate to make decisions and pivot if needed. She is considering hiring in the next two years, which we have included in her ongoing plan.
As part of our phase 2 planning services, we run tax and cash flow projections to make sure we have a proactive plan in place, and there are no tax surprises. She has ongoing support outside of our scheduled meetings when something financial comes up.