Case Study: Emily and Mark’s Path to Clarity and Confidence

Background: A Thriving Business but Overwhelmed

Emily and Mark grew up very middle class. They have two children, aged 4 and 9. Emily is a type-A driver and Mark is laid back, leaving Emily to take the lead on money decisions. Mark is a successful engineer at a large firm allowing them to pay most of their living expenses with his steady income of $190,000. A successful entrepreneur, Emily built her agency from scratch, growing revenue from $800,000 to $2.5 million in just three years. That growth increased her annual income from $80,000 to more than $500,000. Every month they donate money to their church and make annual donations to a few other charities. Emily’s dad passed away three years ago leaving her and her sister each a $250,000 inherited IRA.

Despite their success, Emily felt lost, battling imposter syndrome and carrying a dull sense of constant anxiety that she was missing something and messing something up. At 40, Emily was overwhelmed by her complex finances, caring for her aging mom and Mark’s aging father, unsure of how to manage her growing wealth, plan for retirement, or secure her family’s future.

Challenges:

• Over-contribution to Roth IRAs for the past four years due to income limits

• Lack of tax-efficient strategies for inherited assets

• $600,000 in idle cash sitting in checking accounts

• No clear plan for a future business exit 

• Different approaches to money caused friction between them

The Turning Point: Partnering with Pros

Seeking professional guidance, Emily and Mark turned to a wealth management team. Based on their goals and financial pressures, their advisor helped them complete a Wealth Roadmap, provided a clear, step-by-step plan of action, and scheduled three progress meetings per year to keep them on track. Emily and Mark then took advantage of:

1. Roth IRA Strategy: Used the backdoor Roth IRA to continue growing her retirement savings tax-free.

2. Tax Savings: Switched to a defined benefit plan, saving $100,000+ in taxes and allowing $300,000+ in annual contributions.

3. Cost Segregation: Saved $107,000 in immediate taxes with a cost segregation study on her business property.

4. 529 Plans: Set up education funds for her children, ensuring future college expenses would be tax-free.

5. Dynamic Portfolio: Implemented a flexible investment strategy to adapt to market volatility.

6. Inherited Assets: Addressed Required Minimum Distributions (RMDs) systematically to reduce tax burdens.

7. Strategic Giving: Incorporated appreciated stock donations to avoid capital gains taxes.

8. Tax-Loss Harvesting: Implemented a program to convert short-term market fluctuations (losses) into tax deductions.

Preparing for the Business Exit

With an eye on selling her agency within 7 to 10 years, Emily and her advisor mapped out the steps to maximize her business’ value:

1. Business Valuation: Focused on revenue growth, profitability, and process systematization to reduce dependence on Emily.

2. Recurring Revenue: Developed strategies for long-term contracts and subscription models to increase business stability.

3. Accounting Standardization: Worked with an accounting firm to set up standard categories and have regular reconciliation of accounting.

4. Client Diversification: Reduced reliance on key clients, improving appeal to buyers.

5. Tax Planning for Sale: Prepared the business for tax-efficient sale, considering both asset and stock sale structures.

6. Succession Plan: Began grooming a key employee for a smooth transition post-sale.

After: A Transformed Financial Life

With a written Wealth Roadmap, a step-by-step plan of action and a way to make sure the details are tended to, Emily and Mark had eliminated much of the noise and anxiety in their lives. Within a few weeks they had reduced their tax liability by more than $200,000, which helped their retirement plans get on track. The anxiety that once clouded decisions was replaced by clarity. With a solid strategy for their children’s education, they knew how much to save for retirement and what they could spend for fun. Friction around money conversations dissipated.

No longer feeling like an imposter, Emily confidently made decisions, like helping her brother buy a house, knowing her wealth was working for her. With a clear financial and business plan in place, she could focus on what truly mattered—family, health, and happiness. The stress on her marriage eased, and she and Mark now had more time together, with less financial worry.

Conclusion: The Power of Expert Planning

For first-generation wealthy like Emily and Mark, the right wealth management partnership can transform more than finances—it transforms the entire experience of wealth. With expert guidance, they gained clarity, confidence, and a roadmap to financial freedom on their terms that taps into their financial superpowers of: Purpose, Plan, and Consistent Execution.

Advisory Services offered through Luken Investment Analytics, LLC, a registered investment adviser. LIA does not provide tax or legal advice. This information is strictly for illustrative and educational purposes and does not intend to make an offer or solicitation for the sale or purchase of any specific securities. Investments involve risk and are not guaranteed.