Brendan and Bianca: Strategizing for Wealth Post-Liquidity Event

Brendan, 36, and Bianca, 34, are successful technology and marketing professionals. Brendan has an imminent liquidity event expected to realize approximately $5 million. Brendan earns $300,000 annually, while Bianca earns $120,000.

They held $300K in savings, earning minimal interest. They approached us seeking guidance on wealth-building strategies and a plan for managing their substantial windfall. Their primary concerns included how to exercise and sell shares Brendan holds, effective strategies for managing their wealth between now and the liquidity event, and ways to diversify their investments to secure long-term financial success.

• Share Management: How to strategically exercise and liquidate Brendan’s share options.
• Wealth Diversification: Best practices for diversifying their wealth and establishing a solid financial plan.
• Quality of Life: Maintaining their lifestyle while optimizing their financial future.
• Investment Planning: Balancing high growth investments with risk management.
• Insurance Needs: Ensuring comprehensive protection, particularly for income.
• Property Decisions: Evaluating the potential purchase of an investment property.

1. Investment Strategy: We implemented a diversified mid-to-high growth investment strategy, utilizing an accessible investment account held in Bianca’s name to leverage her lower tax rate. Regular contributions from their cash flow were planned to enhance wealth accumulation.
2. Lifestyle Considerations: To maintain their quality of life and enjoy their current lifestyle, we ensured that their financial plan allowed for discretionary spending without compromising long-term goals.
3. Superannuation Management: We recommended maximizing their long term superannuation outlook, focusing on high-growth investments. No additional contributions were made at this stage, considering their relatively young age and the substantial liquidity event on the horizon.
4. Insurance Coverage: Comprehensive insurance solutions were put in place, with particular focus on protecting their income and ensuring financial security against unforeseen circumstances.
5. Renting vs. Buying: Given their preference for flexibility, Brendan and Bianca chose to continue renting. We explored the potential purchase of an investment property to leverage tax-deductible debt and capitalize on long-term growth opportunities. The 6-year CGT exemption rule was considered for this property, allowing them to
   potentially minimize capital gains tax upon sale if they later decide to buy a family home.
6. Post-Liquidity Event Planning: Upon realization of their $5 million windfall, Brendan, and Bianca plan to take a year off work to travel. We advised holding $2 million in a high-interest account as a conservative approach to purchasing a future home and mitigating risk.
7. Long-Term Wealth Management: The remaining $3 million will be invested in tax- effective structures, featuring a diversified mix of income-producing and growth assets. This strategy aims to provide them with income while they are on sabbatical and ensure financial stability until their return to work.

• Strategic Wealth Management: Brendan and Bianca benefit from a well-structured plan that aligns with their current and future financial goals, including optimized share management and diversified investments.
• Lifestyle Preservation: Their plan allows for a high quality of life, enabling them to enjoy their wealth without sacrificing future financial stability.
• Risk Mitigation: By holding a portion of their funds conservatively and considering tax-effective investment options, they are well-positioned to manage risk and capitalize on growth opportunities.
• Future Flexibility: With a plan to take time off and travel, they have the financial flexibility to pursue personal goals while maintaining long-term investment strategies.
• Comprehensive Coverage: Their insurance needs are addressed, ensuring protection for income and other potential risks, alongside a clear plan for potential property investments.