Unlock Your Wealth Roadmap®
Target Rock Wealth Management is a fee-only fiduciary firm that specializes in helping public company executives unlock their wealth concentrated in a single stock. Taxes and volatility are the biggest roadblocks to fully enjoying this wealth and letting it serve its highest purpose.
How much wealth do you really have in your single stock?
For illustrative purposes only. Does not represent an actual investment and is not a recommendation to buy or sell any security. *Federal long-term capital gains tax includes Medicare surcharge tax of 3.8%. State and local taxes refer to New York state and New York City as an example, and assume highest marginal rates of 8.8% and 3.9%, where capital gains are taxed as ordinary income. State and local taxes vary.
How smooth is the ride in your single stock?
In 2020, the market was up 18%. But 38% of the individual stocks were down for the year 1
During the bull market that began in April 2020, the average stock has fallen by -21.5% at least once, while the index’s worst pullback was -6.6% 2
On average, individual stocks have been nearly 2x more volatile than a diversified, broad market index 3
What to expect along the Unlock Your Wealth Roadmap
1. Tell us your Stock Story
Our first job is to listen. How you came to own your stock, how you feel about it, and the way it fits into your total wealth picture is important.
2. Define your “Big Why”
What do you see as the purpose for this wealth? Wealth management decisions have many dependencies, so understanding what you really care about is crucial for us to design your custom roadmap.
3. Review strategic options
We have many tools available to help solve the problems of taxes and volatility. They are organized around three tightly engineered, risk-managed strategies. The key elements are put and call options, which can be helpful risk-reduction tools when implemented with professional care.
Sell call options to generate income to pay taxes, or losses to offset further gains. Invest the unlocked wealth in a custom diversified portfolio, or spend it.
Sell call options and use the proceeds to buy put options. For those who need to hold the stock but seek a smoother ride.
Structure options around your stock and the broad market to reduce your single stock risk and trade it for broad market risk. Retain the possibility for Tax-Offset Liquidation along the way.
4. Consider your legacy
Many of our clients are already philanthropic, but when they unlock their wealth held in a single stock, it may present an opportunity to give more. We can help curate high-value giving opportunities that are important to you as another approach to reduce your tax bill.
5. Tailor your solution
Once we have gathered the necessary information and advised you on your options, we will present a custom proposal for the pathway forward. While these strategies won’t unlock your wealth overnight, we will be there every step of the way as your fiduciary advisors acting in your best interest.
Reach out to learn more about how we can help!
1. Source: Morningstar, BlackRock. Based on the S&P 500 Index and its constituent stocks as of 1/1/20. 2. Source: Morningstar, BlackRock. Based on “max drawdown” data point from 3/23/20 to 12/31/21 comparing the maximum negative week-to-week returns of the S&P 500 Index over the period to the average of all constituent stocks’ maximum negative week-to-week returns. 3. Source: Morningstar, BlackRock. Based on trailing 3-year standard deviation of annualized monthly returns ending 12/31/21, comparing the average figure across all stocks in the index to that of the S&P 500 Index itself, whereby the ratio of those figures was 1.86. You cannot invest directly in an index. Past performance does not guarantee future results. This is not a recommendation to buy or sell any security.
Target Rock Wealth Management LLC is registered as an Investment Adviser registered with the State of New York and provides advisory services to clients in New York and in other states where Target Rock becomes registered or is exempt from registration. All views, expressions, and opinions displayed or discussed in this material are subject to change. All information provided herein is for educational and informational purposes only and should not be viewed as investment advice. Any references or links to third party information or data are believed to contain accurate information at the time of publishing. © 2022 Target Rock Wealth Management LLC.