Depending on your financial situation, your investment portfolio and asset management needs may require KFM’s 11 years of expertise with Advanced Investment Strategies. Kring Financial’s team of professionals can fulfill the role as your CFO, or chief financial officer. KFM offers experienced consultation service in advanced financial planning areas including:
- Tax-Managed Investment Management
- Employee Stock Options With Proprietary Analytical Tools For Exercise Strategies
- Hedging Concentrated Stock Options
- 1031 Exchange
- Exchange Traded Funds (ETFs)
- Estate Planning Using Trusts And Wealth Transfer Tools
- Life Insurance Owned Outside Of The Estate
- Retirement Planning Using the Retirement Wave Model™
- Retirement Distribution Planning And Stretch Out IRAs
- Multi-Generation Wealth Transfer
- Business Issues Including Company Retirement Plans And Continuation Planning
- Select Services For High Net-Worth Individuals including coordinating an Individualized Team of Advisors.
Each advanced service requires unique financial planning skills. In order to make KFM’s advanced services available to clients, we will incorporate the expertise of our specialized advisors—such as CPAs and attorneys—if required.
Our services are offered on a fee basis. Please contact us for more information on KFM’s unique Advanced Investment Strategies.
Hedging Concentrated Stock Options
Recent years have exposed the risks of portfolios holding highly concentrated stock positions. KFM will work with clients to mitigate and manage risk—meeting financial objectives by employing the following strategies:
Covered Call
This strategy would provide investors with liquidity through selling a “Call” option against the stock position. The option seller receives a premium for the option, which allowing the option buyer to purchase the underlying asset at the strike price. The seller—having received money for the option—is now able to continue benefiting from appreciation in the stock up to the strike price.
Exchange Funds
Exchange funds are a tax-advantaged way for investors to reduce their exposure to an individual stock. With this strategy, highly concentrated stock is exchanged for shares in a diversified portfolio. The exchange is tax-deferred provided that it meets specific IRS requirements including that the exchange fund must be maintained for a minimum of seven years. At that time, the investor obtains a diversified portfolio of securities with a basis equal to the basis of the original position.
Option Collar
A collar strategy is similar to a Covered Call strategy in that the investor sells a “Call” option to generate cash. In order to protect against downside risk (stock depreciation), however, the proceeds are used to buy “Put” options, which guarantee the investor the ability to sell the stock at a pre-determined (strike) price. In this situation, the investor is only obligated to sell the stock if the call strike price is reached, which limits the upside potential for gains but provides insurance that a position will not depreciate in value below the put option strike price.
Charitable Remainder Trusts
Designed for investors with highly appreciated stock and a desire for charitable giving, Charitable Remainder Trusts contribute assets to a fund that provides the investor with a current income tax deduction (subject to IRS adjusted gross income limitations). The stock can then be sold in the trust, where it receives beneficial capital gains tax treatment. Proceeds can be invested so that the investor receives an income either until death or until trust termination.
For more information about hedging concentrated stock options, please contact us.
Named after a section of the Internal Revenue Code 1031 exchanges operate in two dimensions: one deals with real property (land, buildings, and other structures) and the other deals with personal property (boats, aircraft, cattle, etc.). While a 1031 exchange is a useful estate planning tool and a powerful tax and investment strategy, there are many factors and details to consider when completing one. Let Kring Financial help you efficiently and properly handle your 1031 exchange today.
For more information on 1031 Exchanges, contact us.
Sometimes referred to as “Index Stocks,” each fund is essentially a grouping of stocks designed to closely track leading market indices in terms of composition and performance. Investors are then able to quickly and efficiently acquire positions that satisfy their investment needs. Advantages of ETFs include:
- Cost Effectiveness: ETFs are not actively managed, resulting in fees that are a fraction of traditional mutual funds. They also do not carry sales loads over and above the brokerage commissions charged when acquired or sold.
- Diversification: With broad funds tracking indices, ETFs provide investors the ability to complement existing portfolios or instantly create a diversified stock portfolio.
- Investors who hold portfolios dominated with large cap stocks and mutual funds can gain exposure in small and mid cap positions through ETFs.
- Investors looking to get a quick start may acquire a diversified portfolio through a combination of ETFs covering U.S. and foreign markets.
- Easy Asset Allocation: ETF strategies are easy to implement after the desired asset allocation strategy has been finalized.
- Funds can be purchased to address specific allocation needs.
- The allocation mix can be reviewed annually and adjusted as necessary by changing percentages in specific areas.
- Tax Efficiency:
- Mutual funds often create tax liabilities for investors due to the buying and selling activities of fund managers. ETFs avoid this problem by limiting buying and selling activity to when the composition and mix of securities in the underlying index is adjusted.
- With traditional mutual funds, individual investors may be exposed to tax liability resulting from the actions of other investors. ETFs avoid these effects because they are traded on exchanges (like stocks) where buyers and sellers are matched.
KFM advisors can review your portfolio and discuss how ETFs may be a useful tool to meet your needs. Our team can assist in developing an appropriate asset allocation ensuring the proper mix through a managed account of ETFs. To learn more about Kring Financial’s personally managed ETF accounts, please contact us.