The Methodical Compendium of Concentrated Portfolio Options
Managing Concentrated Stock Wealth, Second Edition is the adviser's guide to skillfully managing the risk and opportunity presented by concentrated stock holdings. Written by Tim Kochis, a recognized leader in financial planning, this book walks you through twenty strategies for managing concentrated stock wealth. Each strategy equips you with the tools and information you need to preserve and grow your clients' wealth. Supported with examples from the author's forty years of experience, this practical resource shows you the available options, the best order for clients to review those options, and the reasons why some options are better than others. Kochis addresses common obstacles--such as securities law, taxes, and psychological resistance--and shows you the strategies and execution to prevail.
This new second edition includes:
* Updated references, calculations, and illustrations regarding the latest tax laws
* Revised coverage of derivatives strategies and more examples of potential blind spots
* Tactics to convince some clients to diversify their portfolios and optimize their wealth
* Techniques to exploit concentration in pursuance of greater wealth
They say that you should never put all of your eggs in one basket, but compensation packages, inheritances, IPOs, buyouts, and other situations leave many investors holding a significant portion of their wealth in one stock--often leaving their portfolios in a dangerous position. Managing Concentrated Stock Wealth, Second Edition shows you how to manage the risks and turn a precarious position into an advantage.
Autorentext
TIM KOCHIS is the CEO of Kochis Global, a firm he founded to advance best-in-class wealth management and investment planning services, especially in the emerging economies of Asia. He pioneered the independent model in the U.S. financial services industry, chaired every professional organization in his field, received every achievement award his profession confers over more than 40 years, and directly provided personal financial planning services to thousands of clients at Bank of America, Deloitte, and Aspiriant.
MICHAEL J. LEWIS is the Director of Wealth Strategies at Vernal Point Advisors. Michael previously worked at Aspiriant from 2008–2015, where he served as a wealth manager for high net worth and family office clients, and was deeply involved in developing the firm's systems and intellectual property. At Vernal Point Advisors, Michael focuses on areas of concentrated wealth management, executive compensation optimization, and family office services.
Zusammenfassung
The Methodical Compendium of Concentrated Portfolio Options
Managing Concentrated Stock Wealth, Second Edition is the adviser's guide to skillfully managing the risk and opportunity presented by concentrated stock holdings. Written by Tim Kochis, a recognized leader in financial planning, this book walks you through twenty strategies for managing concentrated stock wealth. Each strategy equips you with the tools and information you need to preserve and grow your clients' wealth. Supported with examples from the author's forty years of experience, this practical resource shows you the available options, the best order for clients to review those options, and the reasons why some options are better than others. Kochis addresses common obstaclessuch as securities law, taxes, and psychological resistanceand shows you the strategies and execution to prevail.
This new second edition includes:
- Updated references, calculations, and illustrations regarding the latest tax laws
- Revised coverage of derivatives strategies and more examples of potential blind spots
- Tactics to convince some clients to diversify their portfolios and optimize their wealth
- Techniques to exploit concentration in pursuance of greater wealth
They say that you should never put all of your eggs in one basket, but compensation packages, inheritances, IPOs, buyouts, and other situations leave many investors holding a significant portion of their wealth in one stockoften leaving their portfolios in a dangerous position. Managing Concentrated Stock Wealth, Second Edition shows you how to manage the risks and turn a precarious position into an advantage.
Inhalt
Foreword xiii
Acknowledgments xvii
Introduction xix
Getting the Priorities Straight xix
Knowing the Client xxi
Chapter Note xxiii
Part I: Sales
Chapter 1 Constraints on Managing Concentration Risk 3
Taxes 4
PreIPO Illiquidity 8
PostIPO Lockups and Other Market Considerations 8
SEC Constraints, the SarbanesOxley Act, and DoddFrank 10
Notice and Reporting 10
Controlled Sales of Founder Stock 11
No Trading on Material, Nonpublic Information 11
No ShortSwing Profits for Corporate Insiders 11
No Favorable Financing for Senior Executives 12
Employment/Career Constraints 12
Psychological Barriers 14
Chapter Notes 17
Chapter 2 Sale and Diversification 19
Overcoming the Tax Constraint 21
Overcoming Psychological Barriers 24
ESOP Sales 25
PreIPO Considerations 26
Let's Just Sell It 27
Chapter 3 Coordinating Long Shares with Stock Options 29
Employee Stock Options 30
Taxes on Options 32
Exercise Strategies 35
Swapping 40
Option Leverage 40
Long Shares: No Leverage 42
Ordering Rule 42
Chapter Note 43
Chapter 4 Diversification Sales and DeferredCompensation Plans 45
Deferred Compensation: Then and Now 46
Sweetening the Pot 47
Risks and Returns 48
The Rabbi Trust 51
Investment Options 52
The Benefits of Deferral 52
The Coin's Two Sides 54
Chapter 5 An Out for Insiders 55
SEC Rule 10b51 Plans 56
ThirdParty Discretion 57
Formula Plans 57
ShortSwing Constraints 58
Sales During RetirementPlan Blackout Periods 58
Plan Logistics 58
Prearranged Plans: Often a Corporate Requirement 59
Appendix XYZ Co. Nondiscretionary Rule 10b51 Sales Plan 59
Chapter 6 Restricted Stock: Tackling Temptation 67
Managing the Section 83(b) Election 68
All That Glitters 69
Risk of Forfeiture 71
Opportunity Cost 72
A SecondBest Strategy 74
Seeing the Light 75
Complications for Insider 76
The Right Fit 77
Chapter Note 80
Appendix 80
Part II: Gifts
Chapter 7 Gifts to Family 85
Transfer Taxes 85
Income Tax Leverage 89
Special Rules on Employer Stock 90
Transfer Structures 90
Gifts Under the Uniform Transfers to Minors Act 91
Minor's Trust 91
Intentionally Defective Grantor Trusts 92
Family Limited Partnerships 94
Gaining Psychic Distance 95
Chapter 8 Nonqualified Stock Options: Gifts to Family 97
Investment Leverage 98
Tax Leverage 99
Timing and Valuation 100
Chapter 9 Gifts to Charity 105
Tax Savings 105
The Cost of Charitable Gifts 107
Special Income Tax Considerations 109
Loss Positions 109
ShortTerm Gains 109
Seasoned Incentive Stock Option Stock 110
LowBasis Shares 110
IRA Assets 111
Tangible Personal Property 111
Structures for Charitable Gifts 112
Direct Gifts 112
DonorAdvised Funds 112
Private Foundations and Supporting Organizations 114
A Word of Caution 115
Appendix: Key Characteristics of Charitable Vehicles 116
Chapter 10 Charita…