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Case Studies

Growing Professional

A young professional at a leading Private Equity Firm had recently made Partner and he was looking for an investment advisory relationship that understood his unique set of issues. His initial goal was to develop a long term investment plan that was customized around his growing private equity holdings and took into regard his need for liquidity due to Partner capital calls. Given his firm’s multitude of global investments in publically traded companies, he also needed a portfolio strategy that negated the conflicts of interests/regulatory issues that arise from traditional stock picking strategies. At Miracle Mile, he found a firm dedicated to customization and comprehensive advice.

After numerous meetings to review his current investments and pinpoint his long term goals, we were able to incorporate his private equity holdings in our analytics and show him a customized, overarching risk profile. From this “risk profile,” we were able to develop an ETF focused allocation that ensured the client was not “doubling down” on certain types of risk. Given his specific overweight to the Health Care sector, we initially built a customized portfolio of ETFs that invested in a broad array of asset classes, including gold, oil , bonds, countries and equity sectors (ex health care).

Over the last several years, the client’s initial need for liquidity has been replaced by a need to invest the large annual Partner payouts triggered by exceptional performance of his firm’s private funds. During that same period, he and his wife have also expanded their family to include two beautiful children. With his growing family and his growing wealth came a growing need to adapt his long term investment plan to address his new sets of needs.

As a result, we have subsequently opened additional family accounts with varying risk profiles aimed at meeting the client’s expanding financial goals. Through our multi-year relationship, the Miracle Mile team has shown to the client the value of an adaptive client-focused investment model that focuses on investment solutions not investment products.

Retired Couple

A prospective client who recently retired approached us to help manage their assets. They had numerous brokerage accounts, various bank accounts, as well as a variety of insurance vehicles. First we helped them consolidate their accounts, and get most of the money under one umbrella. Also the client’s spouse had formerly sold their business but never dissolved the pension plan or profit sharing plan which was at yet another brokerage firm. We introduced the client to an actuary that would help them clean up the plan and distribute the money to the respective participants. We analyzed the clients’ holdings in the various accounts, and there was a lot of duplication and overlap regarding the assets, as each manager had no idea what the next manager was doing. In addition the assets were not properly allocated in a tax efficient manner, so we helped shift the appropriate assets into what we believe to be the most tax efficient accounts.
Working hand in hand with our clients we helped them flush out a spending budget so we could run a cash flow model for them. We ran a sensitivity analysis around the cash flow showing them spending various amounts and how that affected their financial future as well as showing them how inflation would erode their spending power. We created a roadmap for the client, and implemented an asset allocation mix that met the clients expected return profile and matched their risk profile. We helped the family to get on sound footing so they could achieve their financials goals.

Our client also had just begun gifting to their children, and we worked with them to better understand their overall financial picture which was now much more organized, so they could continue to make additional gifts.

Entrepreneur

A prospective client was introduced to Miracle Mile Advisors who was in the midst of selling her business for over $60 million. She had a letter of intent from a private equity fund and was scheduled to “rollover” 10% of the equity value of her business and stay on as a senior executive for at least five years. She hadn’t done any significant financial or estate planning to determine how to effectively transfer wealth to her children and family members or replace the cash flows she would be giving up once she sold her business.
We quickly created a sensitivity analysis that encompassed a range of outcomes for her rollover equity, personal spending, and gifting to her children. Our analysis helped her understand the correlations between her future income and rollover equity which were still tied to her company and highly dependent on the defense sector. We also were able to help her decide the appropriate amount and structure of a pre-transaction gift to her children estate tax free.

Pursuant to the client’s objectives, we structured a portfolio that mitigated the specific concentration risks she had to the defense sector and generated the expected income she needed to support her planned lifestyle. We also gifted $4.1 million in company shares at a discount to several generation skipping trusts for her children with a projected tax savings of over $19 million during her lifetime. As the transaction closed, we worked closely with her attorney and CPA to set up the necessary accounts to receive the proceeds with set aside allocations for taxes.

While all of her advisors were focused on the company and the transaction, we focused on her and her family. We enabled her to see her life post-transaction and make the necessary decisions to provide for her family and establish a solid financial plan that replaced the income she lost from her business. Most importantly, we gave her the peace of mind and confidence knowing she was well prepared for whatever lay ahead.


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