Mr. and Mrs. B.*
Total net worth: $50 million
Originally from California, Mr. and Mrs. B. moved to Wyoming in 1995 following the sale of their business. They have been married for 40 years and have one child who lives in Arizona with her husband and their eight-year-old daughter.
Mr. B. was the chairman and CEO of a privately held company he had founded in 1975. Following a heart attack in 1995, he sold his 85% controlling shares in the company. With $35 million net of tax, he and his wife decided to purchase a small ranch in Wyoming.
In 2001, the couple’s granddaughter was born in Arizona. In order to spend more time with her, they purchased a three-bedroom home in Arizona the following year. As they began to spend more time there, they realized that their son-in-law was not financially responsible and that his reckless spending caused a major strain on his marriage. In 2003, Mr. and Mrs. B. updated their estate plan, adding provisions to deal with their irresponsible son-in-law, but they continued to worry about their daughter’s and granddaughter’s futures.
An Increasingly Complex Financial Picture
Following the sale of his company, Mr. B. was approached by virtually every financial advisor and investment manager on the West Coast to manage his financial affairs. He decided to work directly with money managers, hedge funds and private equity firms.With the momentum-driven markets of the late 90s, the family was worth roughly $75 million by January 2000. By the end of 2002, though, Mr. and Mrs. B. had watched their investment holdings fall to $30 million. Each investment manager told them to stay the course during the horrific decline, and the aggressive private equity firm they had invested in closed its doors after reporting a total loss.
It became clear that the couple needed help in overall portfolio construction and risk management. They turned for guidance to a close friend, who contacted a financial advising firm and asked that the advisor call Mr. and Mrs. B.
The Beginning of a Partnership
As requested, the financial advisor contacted the couple and arranged an appointment. The meeting was very productive and congenial. Mr. and Mrs. B. had completed an extensive questionnaire, which they reviewed with the advisor. Based on their responses to the questionnaire and other discussion during the meeting, the advisor learned that Mr. and Mrs. B.:- Were extremely concerned about their daughter’s and granddaughter’s well-being, both present and future,
- Hoped to travel abroad and pursue their favorite outdoor activities like horseback riding and hiking,
- Desired to spend more time with their daughter and granddaughter,
- Wanted to become more involved in their church and participate in charitable activities, and
- Placed a high value on hard work, education, religious faith, family and community service.
This information, added to the financial details the couple provided after the meeting, enabled the advisor to create a detailed preliminary analysis of the couple’s financial situation. He reviewed the analysis with them in detail, and they agreed that he had accurately captured their situation. They then asked the advisor to proceed to the next step: development of a personalized, comprehensive wealth management proposal tailored to their specific goals, values and needs.
* These hypothetical illustrations and figures are not designed to reflect the actual performance of any particular security or intended as investment advice.
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