- 1. Trust. Service. Performance.
2. For over 20 years Bainco has built a practice byputting
client needs first , and providing unbiased, thoughtfulwealth
strategiesthat meet their unique objectives.
- Registered Investment Advisor firmfounded in 1987
- Specializing in individualized money management and planning
for the complexities of wealth
- ~80 families; current minimum to establish a relationship $5
million
- Partners have anaverage of 20+years industry experience
- Internal team of experienced equity investment professionals
has average tenure at Bainco of15+years*
- Expertise includes CFAs, MBAs, and CFPs as well as FINRA Series
licenses
- Investmentstrategy and management
- Proprietary private investment program
- Wealth services focusing on after-tax results: estate/income
tax plan; with generational asset value protection, risk
management; charitable gifting
*Investment professionals include four Portfolio Managers and
Research Director **5 year period, accounts meeting Baincos minimum
account size standard 3. Clients choose Bainco because we take
responsibility for the comprehensive alignment of their financial
goals, giving each theindividual attentionand objective advice that
is essential for long-term success.
- Bainco strives to establisha lifetime partnership with each
client
- Using an objective, transparent approach, Bainco answers only
to clients
- Senior partners invest similarly to its clients
- Each client works witha team of four dedicated professionalsto
assist in all aspects of their wealth management and planning:
-
- Lead Portfolio Manager, Co-Portfolio Manager, Certified
Financial Planner, Portfolio Manager Associate
- Low ratio of only 25-30 clients for each Portfolio Manager
- Bainco prides itself onresponsiveness to client requests,
initiation of strategies, and execution of investment tactics
- Baincosorientation is toward long-term growthwith below average
volatility
- Each account is individually managedto maximize after-tax
returns
- In addition to investing in public markets,Bainco occasionally
invests in, and provides client access to, private investments
4. Bainco Client Profiles Client Profiles Working with a diverse
client base gives us unique insight into many different businesses,
domestic and international trends, and financial situations.This
knowledge augments our skills in tailoring investments to a wide
variety of estate, tax, and lifestyle planning needs. We have found
this perspective to be invaluable to our analysis of specific
investment ideas on behalf of our clients. Members of the Bainco
family range from heads of major law firms and corporations to
successful entrepreneurs in industries such as technology,
transportation, biotechnology, engineering, retailing, and
advertising.The diversity of our client base is a significant
benefit for members of the Bainco family, affording access to
alternative investments, board seats, business referrals, and a
wide range of other intellectual sharing opportunities. Members of
the Bainco Family include:
- Serial entrepreneur and venture capitalist who has co-founded
five successful technology companies
- Managing partner of a major New England based law firm
- CEO of a health services company bought out by one of the
worlds major pharmaceutical companies
- World renowned author and academic
- Former CEO of a major international advertising concern
- Several respected doctors in the Boston community
- Former business leaders of one of the worlds most successful
telecommunications equipment companies
- Younghusband and wife co-founders of leading apparel
company
- President of a California fuel service company
- Owner of a New England based, privately held,
multimillion-dollar infrastructure engineering and construction
firm
- Founder and CEO of multiple companies in the global transit
industry
- Medical telecommunications company founders with substantial
international investments
- Former principal owner of a preferred Los Angeles hotel
- One of the founders of a publicly traded clean energy company
now serving in public office
- General counsel for leading West Coast publicly traded biotech
company
- CEO of publicly traded software company
- Co-founders of a semiconductor equipment company
- Members of family appearing on the Forbes 400 list of worlds
wealthiest families
5. Bainco is like a family extension for me. I have complete
confidencein Bainco, and that lets me sleep easier. Bainco does a
great job of holding clients hands and really explaining things. I
know were in it together. I want someone who will manage my money
like its their own, and I looked my Bainco team in the eye and
established trust pretty quickly . The support system is great; I
know I can just pick up the phone any time and get what I need.
There is no cookie cutter approach at Bainco;it is a very, very
personal experience . We like the people best, and the
responsiveness of the service. Theresno need to follow-upand worry
about the details, the service is fantastic, and good performance
is just the cherry on top of an excellent experience. 6. Financial
Strategy Design 7. Bainco manages assets in an integrated financial
context, designing a financial strategy that is customized to
reflect each clients individual situation.
- FINANCIAL STRATEGY DESIGN
- INVESTMENT POLICY STATEMENT
- The financial strategy is led by the Certified Financial
Planner and Portfolio Managers, andundertaken with the client .The
clientsother advisors are consultedwhen appropriate.
- This consulting process yields acompletely individualized
allocation strategywhich consider assets across a clients entire
wealth base, and addresses their risk tolerance and historical
downside risk assessment
- The financial strategy is honed into adetailed Investment
Policy Statement (IPS) that integrates each clients business and
personal aspirations:
-
- Sources of wealth, measure of wealth
-
- Liquidity constraints and cash-flow needs
-
- Long-term asset allocation strategy
-
- Generational wealth intentions
-
- Other wealth planning strategies needed
8. Each clients individual asset allocation strategy is
formalized in a written Investment Policy Statement which is
reviewed with clients as their lives change and market conditions
evolve. Client Asset Allocation Investment Policy Statement
Liquidity Needs Client Objectives Tax Situation Investment Period
Risk Tolerance Rate of Return Objective Cash Flow Needs Asset
Constraints Other Investments 9. Wealth Planning Strategies for
Preservation 10. Charitable, Income Tax, and Intergenerational
Wealth Strategies are fully integrated with each clients Investment
Objectives ESTATE PLAN CONSULTATION INCOME TAX CONSULTATION
CHARITABLE GIFT PLANNING ADDITIONAL CONSULTATION SERVICES
- Review existing estate plan documents and discuss the
significant benefits of an estate plan
- Review family goals for transferring wealth to future
generations
- Develop a one-page Estate Plan Distribution Flow Chart
- Review existing tax laws and discuss how they apply to current
holdings
- Periodically consult and coordinate investment and income tax
strategies with clients income tax advisors
- Well planned charitable gifting offers potential advantages for
both the donor and their philanthropic beneficiary:
-
- Increase the amount available to support clients chosen
causes
-
- Turn low cost basis stock into a life long annuity and
philanthropic asset
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- Reduce current income tax through charitable deductions
-
- Manage asset taxation and cash flow by utilizing different
charitable gift giving structures
- Insurance and risk management
- Education, retirement, and stock option planning
- Low cost basis stock planning
11. We take a genuine interest in thecomplexity of wealth ,
applying expertise and creativityto simplifyour clients financial
lives CLIENT ISSUE BAINCOS APPROACH AND SOLUTION A significant
carry forward net operating loss on a client tax return During a
review of a new clients Federal tax return we noticed that the
client had a significant NOL carry-forward on her return.
Additionally, with the clients liquid non-retirement assets
dwindling due to cash flow requirements, we recommended, after
review with the clients accountant, and helped the client move
$675,000 from her regular IRA assets into a Roth IRA.This was done
on a Federal-tax free basis and allows for tax-free withdrawals
from her Roth IRA to meet life-style needs and allows for tax free
growth for the assets in her new Roth IRA. New client had multiple
managers and was literally buried in paper After a thorough review
of stacks of unopened mail, boxes full of old statements, and
holdings in multiple accounts we recommended and implemented a
consolidation of accounts to one custodian, provided on-line access
to those accounts to review trade confirmations, tax information
and account holdings on a real-time basis, and set up a client
filing system in their home. Maximizing the potential of a large
block of a single restricted stock potential and oversee the
paperwork associated with future sales We developed and helped the
client implement a plan that sets criteria for future sales and
manages the administration behind each restricted stock sale.With
the client, Bainco wrote and set-up an automated on-line 10b5-1
trading plan for insiders. The plan denotes future sales criteria
and allows Bainco to coordinate and assist with restricted stock
filings to the SEC and the specific stock exchange, obtain legal
opinion of counsel ensuring the execution of future sales, and
provides a solution for acquiring a loan against restricted stock A
desire to better understand options for utilizing highly
appreciated assets to achieve charitable and income goals as stated
in their IPS We coordinated the drafting of a Charitable Remainder
Trust (CRUT) with the clients attorney, followed through with the
client as it related to the transfer of the asset into the CRUT. We
then sold the asset in the CRUT with no capital gains tax
implications, coordinated with the clients accountant the creation
of a large itemized tax deduction that reduced their projected high
tax liability for that year, and created a lifetime income stream
back the donor (which further acted as a salary replacement given
they had just retired). The remainder will flow into a family named
donor advised fund that their children will meet periodically in
the future to determine how the remaining principal should be
gifted. Discuss with a clients 3 adult children and 10
grandchildren how family money was earned and how to maximize its
potential. We coordinated the drafting of a Family Limited
Partnership (FLP) such that the parents remain a 1% GP (thereby
having a veto right over decisions made by LPs), the adult children
are responsible for finding, analyzing and making illiquid private
investments in the FLP (originally funded with $5 million and today
has more then doubled in value).Based on various structures Bainco
recommended (A GRAT and a SCIN) the eventual gift tax liability of
moving $5million (now over $10 million) of assets down 1 and 2
generations was under $400,000. 12.
- C. was an officer and an early stage employee of a high tech
company that was eventually sold to XYZ Networks (XYZ).
- Real estate assets currently include a home and an investment
property.The Os own the properties jointly (NC and Maine) with a
combined value of nearly $2.5 million (no debt).They sold their
previous residence in New Hampshire valued at over $2.0 million.C.
has other assets totaling approximately $9.1 million.These include
Bainco managed assets of approx $6.7 million, two retirement
accounts totaling nearly $100,000, loan receivables of
approximately $500,000, a venture capital investment of $940,000
(going to $1.0 commitment), a $500,000 real estate investment, and
other personal assets of $400,000.Estimated total net worth is
approximately $12 million.
- They feel their wealth is substantial and their objective is to
preserve and grow it.From their asset base, they need to provide
significant income and cash flow.
- They have three children ages 9, 17, and 23. (K. age 9, D. age
17 and C. age 23).One of C.s main objectives is to keep his family
in their current lifestyle. C. has expressed a desire to diversify
his investment holdings and coordinate his financial affairs.
- Their objective is preservation of wealth, generation of
current income, and have their assets act as an inflation hedge -
principal growth would be a bonus.In order to meet their return
objectives, C. should pursue a total return approach.An essential
part of this approach involved the diversification of the
concentrated position in XYZ, an appropriate asset allocation and
the repositioning of a significant amount of cash.
- Despite C.s entrepreneurial background and his long-term
investment horizon, he currently remains a cautious investor with a
significant cash position.We would characterize C. as having a
desire to move toward a more balanced portfolio that incorporates
his need for monthly cash flow, inflationary hedge and some long
term growth.
- Their investment time horizon is long.The first horizon extends
through both of their lifetimes.The second horizon will begin when
the assets presumably pass to their children.
- Current cash flow parameters indicate approximately $25,000 per
month for living expenses.Funding of 529 educational plans (to be
discussed) required $220,000 and may require future contributions.
They may consider funding a donor-advised charitable gift fund
which will require a transfer of assets (to be discussed).
Sample Investment Policy Statement A 13.
- C. is expected to be in a low Federal income tax bracket due to
significant carry forward losses and limited taxable income.Any
Federal taxable income is projected to be at the AMT rate
(26%/28%).Further, New Hampshire has a state income tax rate of
nearly 5% on interest and dividends only.Bainco will manage the
portfolio in a tax sensitive manner and will periodically
coordinate taxable investment activity with the clients
accountant.
- Recommended Asset Allocation
- We recommend the following for assets excluding real
estate:
- Allocation Post-Tax Return
- TOTAL 100%* 8.0% (weighted and rounded)
- *Real estate equity, when added to target allocation, could
represent up to 20-25% of total net worth in an acceptable
financial plan recommendation.
- Over time, Bainco will review the following financial planning
topics with the O.s:
-
- Review Estate Plan documents and note gifting structures that
will allow the O.s to continue to control the assets, while giving
up future appreciation (i.e. an FLP).
-
- Discuss asset balancing to take advantage of the federal per
person exemption ($1.5 million in 2005 and $2.0 million in
2006).Assets held jointly do not take advantage of this estate tax
benefit.
-
- Monitoring of 529 Education plans.
-
- Consider establishing a Fidelity Charitable Gift Fund.
- Manage the concentrated XYZ position cooperatively and
aggressively
-
- Sell XYZ to approximately $750k market value over time.
- Monitor the status of non-managed investments
- Objective is to create absolute return
- Build a diversified portfolio of 30-50 positions
- Create cash flow from dividends, interest, option writing
premiums, and capital gains
- Periodically (monthly?) will send cash flow to client
- Sell covered calls to develop short term capital gains to
create synthetic tax-exempt income
- Create sufficient appreciation to offset inflation
- Manage downside risk with sell discipline
- Coordinate asset transfer and accounting and tax reporting from
Alternative Investment Company
- Develop estate plan efficiency in investment vehicles
- Fixed income investments short term until interest rates
stabilize
- Occasionally present private deals for C.s approval
- Bainco will maintain sufficient cash and utilize the ability to
vary cash levels opportunistically
- Seeking best risk-adjusted returns from sectors when
considering macro-economic factors
- Phase into portfolio decisions made by Bainco Research
team
- Look for 12-24 month holding period time horizon (not currently
critical due to loss carry forward)
- Bainco Management Services Team:
- Portfolio Manager Sam Bain
- Portfolio Manager Todd Speed
- Financial Consulting Robert Katz
- Portfolio Manager Associate Jack Piper
14. B Net Estate $59,930,588 Joint Living Trust $18,816,630
Living Trust #2 $6,732,338 Concentrated Stock $1,535,148 Assets
Moved Outside of EstateA $9,946,472 FLP Share (LT) $4,000,000 GRAT
Shares $4,000,000 Real Estate $14,900,000 Gross Estate $49,984,116
Family Foundation (proj.) $4,698,411 Prog. Estate Tax Exemption
$3,000,000 Taxable Estate $42,285,705 Estate Tax (Fed + State)
$19,874,281 Available to Children $24,811,424 Direct Gifts $600,000
Review of Beneficiaries Account Child 1 Child 2 Child 3 SCIN 1/3
FLP $1,333,333 $1,333,333 $1,333,333 $4,000,000 Trust 1/3 of
$8,270,474 $8,270,474 $8,270,474 $24,811,424 CLAT B $769,778
$769,778 $769,778 $2,309,334 IRA C $322,427 $322,427 $322,427
$967,281 Total $10,696,012$10,696,012$10,696,012Family Foundation
(Including CRUT) Direct Gifts $7,368,268$600,000A) This Figure does
not include CRUT, CLAT, children's FLP ownership, Fidelity Gift
Fund, and IRAs. B) Does not include income stream from CLAT C) Does
not include income stream from IRA- NIMCRUT Disclaimer: The above
is based on information we believe to be accurate. Depicted and
actual dollar amounts may vary and significantly affect results.
15. Smith Family Limited Partnership (No gift tax paid) SCIN- 15
year Mrs. Smith Mr. Smith Mr. and Mrs. Smith(33% LP Shares) ($1.67
million) Remain for future gifts Smith Family Limited Partnership
(1% GP-EMCO LLC) GRAT-15 year A B C A B C $51,900 Annuity Payments
(annual) $98,060 Annuity Payments (Quarterly- $24,515) $2.5 million
Contribution $2.5 million Contribution 33% LP Shares $1.67 million
33% LP Shares $1.67 million $2.1 millionRemaining Principal $2.4
millionRemaining Principal *Assumes 8% rate of return on principal
** C 16. All information has been obtained from sources believed to
be reliable, but its accuracy is not guaranteed. This material is
for informational purposes only. Individual tax factors and risk
tolerance must be considered when making any investment decision.
Past performance does not guarantee future results. For a complete
presentation to include our investment management and private deal
approach, please contact: Robert Katz, CFP Managing
Director,Partner, Wealth Planning Strategies Bainco International
Investors 372 Washington Street Wellesley, MA 02481 617-536-0333
main 781-997-5112 direct [email_address] www.bainco.com