After many years of running a successful medical supply company, Sam & Katelyn were given an offer they couldn’t refuse. A competitor wanted to buy their company outright for a very significant amount of money. Sam and Katelyn were thrilled and terrified all at the same time. They knew how to make money in their business and they were very happy with the lifestyle it provided. Taking this offer and living off the money would be a whole new ballgame, and that frightened them.
Over the years the company profits had allowed them to pay off all their debt and save the maximum allowable in their RRSP’s and TFSA’s. By most standards they were already very well off. Adding millions of dollars to the pot would take them to a new level of “liquid” wealth they had never considered before. Along with this came the anxiety of what to do with the money and where to invest it? Even with this new wealth they weren’t sure if they could afford the lifestyle they had envisioned for retirement. What if they lost it all in the stock market? The stakes were just that much higher now!
The first step for Sam and Katelyn was to allow Conrad to work with their legal and accounting professionals to ensure the proceeds from the sale were received in the most tax efficient manner. Once that was accomplished, a comprehensive retirement income and estate plan was completed. This plan showed the couple how to position their wealth to ensure they would always have the income they needed to fund their lifestyle. Using our Income Allocation Model, a portion of their investments would be used to generate guaranteed income for life, essentially creating their own individual pensions. This combined with the income from CPP and OAS would be more than adequate to cover all their basic expenses.
The next challenge was where to invest the money received from the sale of the business. It needed to be invested prudently, with an eye on capital preservation to generate the additional income to fund their “variable lifestyle expenses”. The financial plan outlined the required rate of return needed, now it was time to find the right investment vehicle.
Because of the amount of money involved, Sam & Katelyn were able to consider investment options not available to the average retail investor. For this, a high net worth investment counselling firm was engaged to do the investment management, on a referral basis. Conrad stays involved by providing investment manager oversight on an annual basis to ensure that the chosen investment counselling firm continues to do what the financial plan requires of them.
Once Sam and Katelyn were shown how their new found wealth could provide the income they needed they were quite comfortable. Having a written plan, a highly respected investment counselling firm handing the money, and investment manager oversight gave this couple the confidence to take the leap from successful business owners to relaxed retirees.