Michael & Anne’s Story



Michael is 60 and has just retired from an agency of the federal government.  He also served 15 years in the military.  Anne is also 60 and has been retired for almost ten years.  She worked as a nurse at a local VA hospital.  Anne also served in the military which is how she and Michael met.  They have three grown children and five grandchildren.  Michael and Anne are both receiving duel pensions from the government.  Their combined pension income easily covers non-discretionary and discretionary expenses.  In addition to pension income Michael and Anne each have Thrift Savings Plans, a joint brokerage account and a moderate cash savings account.  They also own a duplex on the beach which produces intermittent rental income.  Michael and Anne have a good accountant and have been working with a financial advisor for many years.  They came to us initially because they were intrigued by the “full-service” nature of our firm.


Since Michael and Anne had been fairly confident on the phone regarding their current financial plan the initial questions of our “Discovery Process” centered on why they wanted to meet with us.  We discovered early on that Michael and Anne had two primary goals for retirement; First, Help returning veterans assimilate back into society and second, maximize their inheritance to family.  While Michael and Anne both worked for the federal government they had concerns about current and future tax rates and how that might impact their retirement and estate.  They also had concerns about investment loss.   Near the conclusion of our meeting Anne mentioned a large, concentrated stock position she had inherited from her parents.  She was not aware of the cost basis.  In addition, the duplex they own, while producing income, has become more of a burden in recent years.


Using our Discovery Process profiler we conducted a comprehensive review of all portfolio assets, liabilities, estate documents and insurance coverage. As a result we crafted a goals based financial plan that took into consideration Michael and Anne’s desire to help returning vet’s, reduce taxes and maximize inheritance.  After this process Michael and Anne determined to retain the services of their accountant but move their investible assets to our firm.

  • The investment portfolio analysis portion of our profile revealed a significant weighting to domestic and international equities.  After reviewing the portfolio we discovered a great deal of volatility over the last decade.  As result the entire portfolio was re-allocated to diversify and in hopes of reducing overall volatility as follows:
  • Overall equity concentrations were reduced
  • Domestic bonds, international bonds, commodities and real estate were all incorporated into the account
  • 15% of the portfolio was moved to a separate account to hold “Alternative” investments in hope of further diversifying their portfolio.
  • After lengthy research we established Anne’s inherited stock cost-basis and recommended selling half of the position over a six month period.  We then established an investment strategy on the remaining position to help boost returns on the “Blue-Chip” stock*. This stock was held in a separate account so as to maintain its “Lineage”
  • In order to maximize the potential, tax-free income available for inheritance we recommended a ROTH conversion of Michael and Anne’s Qualified Accounts (Thrift Savings Plans).  In order to offset a portion of the tax generated by the conversion we recommended they invest in a natural resources drilling program which features tax advantages.
  • Michael and Anne’s estate documents had been recently updated and seemed to accomplish their goals.
  • Based on Michael’s strong management skills we suggested he and Anne consider starting a consulting company that worked with returning vet’s, identifying their work skills and matching them to local employers.   They thought this was a wonderful, practical way to help returning vets assimilate back into society.  Their accountant agreed and was able to maximize the tax benefits of owning/operating a small business.
  • The extra income produced from their small business easily equaled the income they were receiving from their duplex so it was sold and the proceeds re-invested in other asset classes.
  • We established a quarterly portfolio review and annual Family Financial Review.  These reviews created a healthy, on-going dialogue about Michael and Anne’s financial plan, opportunity to adapt as needed and address any new events that might arise.


By conducting a comprehensive review of Michael and Anne’s entire financial picture we were able to better tailor their investment portfolio to meet inheritance goals.  Our creative and forward thinking suggested several actions, such as a ROTH conversion and tapping into the tax benefits of “Intangible Drilling Costs”.  These actions further addressed Michael and Anne’s goal of reducing taxes and protecting inheritance.  Finally, they have created a wonderful business that provides a small income but more importantly provides a service to returning military personell and the local community.  Michael and Anne are now far more confident in their financial plan and their future direction.

*Blue chip stocks are seen as a less volatile investment than owning shares in companies without blue chip status because blue chips have an institutional status in the economy. Investors may buy blue chip companies to provide steady growth in their portfolios. The stock price of a blue chip usually closely follows the S&P 500.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
**Our case studies are based on a combination of actual and hypothetical client circumstance and are provided for reference purposes only.  Each client interaction and outcome is unique.  The names used are fictional.