This Entrepreneur Didn’t Have Time to Be a Wealth Manager

Meet the Family: Raj Patel* was an entrepreneur who devoted his career to growing the software business he founded. He sold a share of his company to another firm and then began plotting his ultimate exit from the business within a three-to-five year horizon. Raj was busy working toward that future goal when he started to realize he didn’t have a clue on how he’d invest the cash, nor what this financial windfall would mean for his wife and sons. Meanwhile, his wife, Marianne, expressed increasing anxiety around the lack of a clear plan to handle the current and future wealth the family was facing.

The Challenge: We discovered that the Patel family’s previous financial advisor had dropped the ball on several different fronts. The Patels asked Pitcairn to step in. Among the top concerns were financially setting up the teenage sons for life, estate planning, and business planning as Raj ultimately intended to sell the remainder of his business, and how to invest the substantial liquidity from the partial sale that had already occurred.

Pitcairn’s Solution: To provide for his sons’ financial futures and to minimize eventual estate taxes, we designed a gifting plan for the children. We then helped to develop a pre-sale transaction plan to prepare for the disposition of the business. Next, we introduced Raj to our open architecture investment approach. Though he didn’t have time to manage his own money, Raj liked to be very involved and fully informed. Always analytical, he was impressed by the results of the tax overlay Pitcairn applies to its investment portfolios – with about 1% added to returns annually. He was also intrigued by our blending of active and passive managers in order to capture positive returns while reducing costs and risks.

The Family’s Response: Marianne was satisfied that the gifting plan would prevent future conflict between their sons and was eager to initiate a family learning plan to help prepare them for their wealth. Raj was relieved to have more time to focus on his business without worrying about the family’s financial future. From our first meeting, Raj was clear that he was looking for a financial services team that was looking out for his long-term interests. At our first quarterly investment review, he didn’t even look at specific performance. He asked how the implementation of the plan was progressing and the status of the asset allocation strategy. He was confident he could leave the specifics to us.

*The names have been changed.