Meaningful Discussions

I.                    It all begins with a conversation

Every client relationship begins with a conversation. To identify and prioritize what personal and financial goals matter most, it is paramount that we take the time to fully understand the dynamics of our clients’ lives, families, careers, finances, situations and aspirations. This is especially important when helping clients face complex financial challenges that require thoughtful and sophisticated strategies on a timely basis. We have honed our planning-based approach over many years. It recognizes the importance of understanding each client’s financial position, goals, objectives, regulatory requirements, and the impact of future equity award vesting.

II.                  Collaborative teamwork 

Communication with a client’s full advisory team is often overlooked by other advisors. For us, it is a common, everyday practice. In fact, we often collaborate with our clients’ other trusted professionals (attorneys, CPAs, and plan professionals) to align efforts and strategies. For our clients with equity ownership or stock awards, our ability to identify financial concerns and objectives allows us to establish the role that equity ownership and compensation play their overall financial picture.

Capabilities

Using the broad investing resources of Merrill, we can also assist with potential solutions for income management, education funding, retirement income planning, and guidance for executives with concentrated stock positions, traditional and alternative investments, wealth transfer and estate planning services. And with your permission we can also work closely with your other professionals, such as attorneys, accountants and specialists, to help you pursue your goals.

DISCLOSURE: Some or all alternative investments may not be appropriate for certain investors. Certain alternative investments carry significant risk and are not subject to the same regulatory oversight as mutual funds and other appropriate investments. For these reasons, access to alternative investments may be limited to investors who are designated as sophisticated, high-net-worth investors.

Focus On Corporate Executives

For corporate executives, we offer guidance for diversification^* of concentrated stock positions. For business owners, we can help them build company benefit plans and provide access to Bank of America for help in addressing cash flow, lending needs and other bank-related needs. For those nearing retirement, we consider inflation, health care costs and other factors to help them pursue desired lifestyles. We are available to talk with clients and explore potential opportunities with them.

*Diversification does not ensure a profit or protect against loss in declining markets.

This material should be regarded as general or educational information on healthcare or Social Security considerations and is not intended to provide specific healthcare or social security advice. If you have questions regarding your particular situation, please contact your legal or tax advisor.

The Planning Process

We believe the development of a comprehensive financial strategy is critical to the success of our clientele. We begin by gaining a rich understanding of our clients’ current financial circumstances through and candid conversation about what’s most important to them. With a powerful analytical tool (Wealth Outlook) that provides detailed reporting, we assist our clients with detailed discussions about lifestyle mileposts, pursuing meaningful investment outcomes, and the potential trade-offs that may need to be made – taking into account factors including cash flow, lifestyle, liabilities, stock compensation, and market fluctuations.

The Wealth Outlook's sophisticated capabilities can provide detailed illustration modules that include:

​Net Worth Statement - An inventory of a client's personal assets, investment assets, investment property, and business property, providing an evaluation of overall financial well-being.

​Retirement Analysis - Illustrates different retirement scenarios based on various retirement ages, pensions, Social Security benefits, Deferred compensation, retirement life styles and spending goals, etc.

​Asset Allocation Analysis - Evaluates allocation strategies for clients by capturing current portfolio information to compare new and existing portfolios, which can provide an assets allocation that is consistent with goals, time horizon, risk, and liquidity needs.

​Education Analysis - Provides a comparison of college saving vehicles and funding status modeling for specific public or private higher education institutions. Gauging progress toward goal, savings rates, and set strategies designed to help them meet education goals.

​Goal Funding Status - ​Compares the cost of attaining a client’s goals with the resources they have available to fund them – helping to answer the question, “Do I have enough?” If there appears to be a shortfall in funding the client’s goals, this analysis can help facilitate a meaningful conversation about making trade-offs or identifying different goals-driven strategies.

​Risk Allocation Statement - Illustrates the relationship between risk and return in portfolios. Organizes a client's assets and liabilities (including those held away from Merrill) by risk-return characteristics to reveal their risk allocation.

Equity Compensation

The Newhouse Sheridan Wealth Management Group has more than 30 years of combined experience working with employees, founders and C-suite executives in the Equity Compensation arena. Many of those years have been spent servicing local fortune 500 companies by providing wealth planning services, employee education, trading guidance and assistance, and the implementation of trading 10(b)5-1 trading plans for Founders and Section 16 officers.

We have found the majority of executives understand the generational life-changing impact of equity compensation. They come to us with a desire to understand the financial significance of equity compensation and to make thoughtful and informed decisions. This often requires the effective coordination of several disciplines; Taxes, Legal and Personal Financial, which many find overwhelming.

Our experience serving corporate executives allows us to provide requisite and suitable guidance pertaining to Restricted Stock, Stock Options, Performance Awards, Deferred Compensation, Concentrated Stock, ESPP, and strategies used to hedge, create cash-flow and minimize tax exposure for concentrated positions. Our planning process coordinates these corporate benefits with our clients’ personal wealth and financial objectives – through customized investment and retirement planning, cash flow planning, tax minimization and estate planning strategies.

Merrill has developed proprietary planning tools to statistically assess the impact of equity compensation and single stock concentration within a portfolio, and providing modeling capabilities and the impact of future equity award vesting.

Stock Option Analysis: When and how a client chooses to exercise their stock options can significantly impact their ability to pursue their financial goals. The Stock Options Analysis can help compare and assess different strategies for exercising stock options to determine an approach that best aligns with financial objectives, and help assess and compare different strategies for exercising stock options and restricted stock to best aligns with financial goals.

Clients can view side-by-side the net proceeds generated from several potential exercise strategies. The report clearly displays the potential trade-offs and tax considerations associated with each strategy. 

• Provide a summary of all stock option grants for each company from which the client has received grants.
• Illustrate a stock option timeline, identifying the grant, vesting and expiration dates.
• Produce a detailed sensitivity analysis, capturing the range of potential net proceeds from various exercise strategies. Restricted stock is separated from employee stock options in this analysis.
• Highlight the key considerations for the different types of equity compensation that may make up a client’s portfolio.
• Compare the financial impact of decisions to exercise stock options now or in the future.
• Customize the report by selecting the analyses, educational content and next steps you would like to include.

Awards Analysis can provide the framework to help clients understand the value of their equity option, and how values may change depending on various factors such as time and price. Through three separate valuation methods - Intrinsic Value, Net Value, Black-Scholes Value (BSV) and the ability to perform sensitivity analysis based upon potential changes in the underlying stock price, we can leverage the application to not only educate a participant on the value of their awards, but also provide information that aides in their decision-making around order of exercise, 10b5-1 planning and their overall financial strategy.

Our intent is to satisfy regulatory requirements, account for market optics, mitigate insider-trading concerns, and minimize risk and tax consequences. Incisive in our approach; 

1. Regulatory issues for Insider- Affiliate -Section 16-Form 144
2. Pre-Approval Requirements
3. Trading window Restrictions
4. Holding Requirements
5. 10(b)5-1
6. Concentrated Stock Management
7. Stock Option Analysis-Black Sholes Valuation
8. Low volume Liquidity  
   
   

We also help clients with pre-IPO planning, and help them comply with SEC rules, their company’s trading restrictions, and equity reporting requirements. When it can prove beneficial, we can provide easier access to cash – especially when cash flow is uneven (due to compensation structures that may include lump sum payments, profit sharing and/or restricted stock).

*Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.