Client Profile Examples

Scenario One: Business Owner Couple - Bill and Marge

“We accumulated a substantial amount of money over the 30 years we have owned our dairy business,” says Bill. “We were searching for a seasoned advisor who has been through various business cycles – someone who could understand our business risk and that our money we take from our business needed to be made tax efficient but protected from any longer term market shocks. Liquidity was important to us since money in our business is always our biggest risk. Solid conservative growth on top of our business income is important to us”

History:

Bill and Marge Smith, ages 61 and 54, began their dairy business distributing milk, butter, cheeses and ice cream in 1990. Beginning as a two person operation, the business now employs 30 people which is always a stress that Bill feels. He wants his business to thrive looking out for their welfare. Bill always strives to maintain happy employees since to Bill and Marge this means better productivity and a strong cash flowing business. Bill is now turning to maximizing the income he takes with his wife Marge who works in the business as director and head of sales and marketing. The Smith’s own their 11,000 square foot building having moved from a leased premises 15 years earlier with substantial capital gain value.

Bill and Marge have two grown children, a daughter Jane (26) with cerebral palsy and a son (Jacob) who is thriving at a downtown law firm. Bill worries about the rising costs of medical bills that will be required to help Jane in her later adult years.

What keeps Bill and Marge up at night?

• How to provide the best quality of life for their lovely daughter Jane
• Wondering how to maximize the value of their business given the trends to less milk consumption
• Concerns about their employees and Marge’s ailing mother, age 82, who needs to move to a long-term care residence costing $5,500 per month.
• How to create a transition plan for their son who has shown interest in the business
• Creating enough wealth to maintain their lifestyle and guard against sudden medical costs in their later years.

What solutions did we create?

• We met with Bill and Marge’s CPA and business lawyer to better understand the structure of their current estate and to understand what risks were inherent in their business long term. This allowed us to understand the risk profile that should be created and profiled in an Investment Policy Statement for Bill and Marge.
• We consulted an expert in disability plans for children and compared the benefit of using a regular trust arrangement or a Henson Trust to ensure a comfortable lifestyle of dignity for their lovely daughter Jane. An additional life insurance joint last to die policy was set up to fund anticipated increasing medical costs for Jane with amounts forecasted and calculated by our Raymond James Financial Planners.
• A health and welfare trust funded by pre-tax cash flow from the dairy business was set up to help employees pay medical expenses adding to goodwill in the company. A review of the company group benefits plan was advised resulting in group life savings to the company.
• We advised a review of the company CPA to see if there were any tax strategies for Bill and Marge that were missing.
• Existing insurance types and levels were evaluated by Raymond James Financial Planning to ensure optimal use of pre-tax money and the use of key person insurance for the top earning sales team responsible for large account relationships.
• Changed the existing competitor portfolio based on subjective decision making to two discretionary teams operating under the Partners Program to better align goals and financial objectives.
• Identified how much capital needed to be accumulated net of government existing benefits, and estimated sale of business in 6 years, net of inflation and estimated average interest rates.
• Advised to look at separating the business value from the ownership of the building in case of future lawsuits with input from the family business lawyer.

What did Bill and Marge appreciate?

• Detailed solutions so they could choose what is most comforting to them
• Clear effective communication, trust and integrity applied to their money
• A roadmap to understand their money and an emphasis on holistic advice
• A consistent, logical and disciplined discretionary approach that relieves anxiety from money management

Scenario Two: Mary - Retired Widow

History:

Mary aged 76 lost her husband William three years ago to cancer aged 81. Mary had always relied upon William to guide the growth of family money. They have two adult children married and thriving. Mary has three grandchildren, her husband’s $61,000 pension from the government and Mary’s $53,000 annual pension from her career as a high school principal. Mary is in good health and has lived in a rented a condo for the last 12 years, having sold their home to be closer to their children.

What keeps Mary up at night?

1. Mary wants to enjoy her grandchildren all below the ages of 18 and worries if she will have enough money to last her lifetime to travel and live comfortably.
2. What happens if her health fails? Will she have enough money to pay her medical bills?
3. How does Mary pass her assets to her children?
4. Should Mary keep the family cottage?
5. How to set up gift giving

What solutions did we create for Mary?

• Reviewed all spending and cash flows net of government benefits. Advised and structured taxable and registered discretionary accounts with an income emphasis.
• Reviewed future estimated health care expenses and created a separate account to help fund Mary’s long-term care.
• Held meeting with CPA to discuss tax position of cottage. Cottage deemed principal residence per tax rules which enabled a tax-free distribution.
• RIF drawdown schedule created to keep income under the clawback threshold with assistance from Raymond James Financial Planning Group.
• Set up charitable giving account to establish a foundation in the name of Mary’s late husband to benefit disadvantaged youth

What did Mary appreciate?

• An attentive team who listens to her core concerns
• Advisors who care about her family and welfare
• Tailored recommendations to Mary’s lifestyle
• Professional discretionary portfolio management that is consistent comforting, transparent and relieves anxiety