3 Best Financial Decisions We Have Seen

After countless meetings, we’ve witnessed some of the best financial decisions made by our clients. One standout example was when a client, heavily invested in company stock, decided to diversify their portfolio, securing their financial future even though it incurred a significant tax bill. This move prevented substantial losses when the stock price plummeted.

Another impactful decision involved selling or not selling a business. In one case, a well-thought-out transition plan allowed the business to stay within the family, benefiting both father and son. In contrast, other clients chose to sell their businesses to pursue new opportunities or philanthropic endeavors.

The common thread in these success stories is the importance of holistic, values-based discussions and consulting with professionals to weigh various factors in decision-making. A well-crafted financial plan can lead to sound choices. Ultimately, working with us at EWA has proven to be one of the best financial decisions clients have made.

Video Transcript

After thousands and thousands of meetings, we’ve narrowed it down to what we think are some of the best financial decisions we have seen clients make. And we were very grateful to be part of these decisions.

Jameson let’s start with number one. Yeah, the best financial decision that we’ve helped a client make was around company stock. So this client worked at a big corporation. They were with the company before they IPOed ten years ago, got granted all of this stock.

Stock price exploded, and net worth was north of $3 million. General recommendation rule of thumb when we’re planning, especially with somebody that’s that tied to a large corporation, has 90% of their balance sheet tied up in one company, is, let’s get this down and unwind some of this.

To have under 10% of your balance sheet wrapped up in this one single stock or one single company or individual equity. So stock price shot up. This was at the end of 2020, beginning of 2021. So right in the middle of the last ten years of a significant bull market, recommended selling all of the company stock.

To maintain that again, over $3 million net worth. Took the advice, basically secured their financial future. Kids education is fully funded, all debts paid off. They’re able to retire in five years if they wanted to.

Fast forward. Now, as we see the stock market dip that we’ve seen, in 2022, that stock went from over $300 a share down to under $20 a share. So had they not taken that advice, kids education wouldn’t have been funded, retirement wouldn’t have been on track, debt wouldn’t have been paid off.

Making sure they’re not over concentrated in one company, making decisions based on logic and not being emotionally tied to one stock or one single company. Matt, tell us about one of. Well, just to piggyback off that, because I was part of some of those conversations, and I remember.

It a tax preparer involved saying don’t do this because of the taxes. That $3 million did get cut into $2 million after taxes. So the general advice there was multiple people on the table was don’t do this because of the tax bill, because you’re going to be in the highest capital gain rates, maybe when you retire you’ll be lower had that.

So yes, we took 3 million and now it’s 2 million that’s grown, obviously, but it was a pretty big significant tax bill to vest and to secure those goals such as education or retirement, et cetera. However, if we just look at the tax part of the equation or that advice had been followed irregardless of taxes, the net worth of that client would have not been 3 million, it would have been less than $300,000 at this point.

So really making sure your money is in support of your goals, factoring in peace of mind, factoring in diversification, factoring in taxes should be all part of the equation. But you really need to look at what’s most important for you specifically in your financial plan and looking at your money as a resource to reach those goals.

Not looking at factors like I want to just pay as little tax as possible. When just looking at one or two factors, it can lead to really bad results. But when balancing all those factors and ultimately creating a hierarchy and a value system for your own financial plan can lead to very good results.

And even if the company had gone from 300 to 400, those clients goals wouldn’t have changed. The goal would have still been to fund education, the goal would have still been to be financially independent in our mid fifty s, and those would have still been on track irregardless of that stock price above that price.

So sometimes just looking at being smart versus making another dollar just for the sake of dollar can be really impactful to secure one’s financial future. Jameson, thanks for sharing that. Absolutely.

So the second most impactful thing we’ve seen is we’ve seen clients that have decided to sell their business and it’d be a phenomenal decision and to not sell their business and it’d be a phenomenal decision.

When we say phenomenal decision. The characteristics that have come with those decisions is multiple meetings, multiple thought out processes of how’s the transition going to occur if we don’t sell. In one case, it was a decision do we sell it to a public company or do we try to transfer it from father to son?

We just looked at the business on the books, and the valuation would have completely taken care of the father. But the son was very confident, know what? I think I can buy out the father within the next five years.

And he still wanted to have some involvement, and then I still own 100% of the business. And that turned out to be true. Phenomenal decision. Had they walked away, the father would have left with a lot less money, and the son would have left with a w two job versus owning 100% of a very profitable, closely held business.

On the flip side of that, we’ve found that some clients have had health concerns, or some clients have felt any more purpose from running a certain business or want to steer a different direction, have decided to sell their business.

It’s been a great decision to free up their time to do a 180 and focus on maybe a different type of career, such as philanthropy or non for profit work, et cetera. So the characteristics in all these examples we’ve found are very holistic and values based conversations and multiple conversations that have taken the time and the resources of professionals to input and to weigh the different factors that come along.

So a good financial plan, we found, can really lead to good decision making in the end. James, what’s third and probably the best financial decision we’ve seen clients make? Probably just choosing to work with Ewa as a whole.

Very good point. Very good point. We’re young, we’re fun, we’re energetic, where we’re most excited to serve you and your needs.

Show Full Transcript

Recommended Videos

Tips for Staying Calm During a Recession
10 Tips for Maximizing Your Financial Plan in 2023: Tip 8- Estate Planning
5 Tax Tips for Business Owners- Tip 5- Implement a 401k and Cash Balance Plan
10 Tips for Current Retirees - Tip 3- Be Aware of Annuities
5 Tips for Retirees- Tip 1- Tax Bracket Management
Managing Bond Investments Amid Market Volatility and Rising Interest Rates