double down on family life

double down on normalcy

Diversification is boring.

until it's not.

a donor-advised fund (DAF) isn't a magical tax loophole.

if you donate $500K of appreciated stock, you've still given away $500K of assets.

If it's an immediate gift, you don't even need a DAF.

just gift shares directly where you want them to go.

yes, you might avoid capital gains taxes.

yes, you might receive a substantial charitable deduction on Schedule A.

but it's giving away $1 to save a portion of that $1 in taxes.

a DAF is an ~excellent~ tool when charitable giving is already part of your plan, and you want some time to figure out where it goes (or to simply pull future deductions forward).

it's a terrible reason to give away money you otherwise intended to keep...

It takes a lifetime to build a reputation and 1 second to destroy it

step foot in the house after 3 days on the road, did a quick hand off with my wife so she could go to a dinner outing with girlfriends

7 m/o immediately has the nastiest blowout in his high chair, all through his onesie and everything

one of those “straight to the bath tub” disasters

welcome home!

United Wifi

vs

United Wifi with Starlink

a tax-aware investment manager projects $1.5M of harvested capital losses for L/S account.

at a hypothetical 37.1% combined capital-gains rate, that’s ~$557K of gross potential tax deferral in year 1.

sounds incredible.

it IS incredible.

except:

> you need to realize gains now or in the future to use the realized losses effectively
> fees, financing costs, pre-tax alpha and/or tracking error matter a lot
> tax loss harvesting typically create a growing embedded capital-gains liability in the replacement portfolio
> a lot of the benefit is tax DEFERRAL

none of this makes the strategy bad.

quite the opposite…as it can be extremely powerful for the right investors.

show me the expected after-tax liquidation value, net annualized returns versus a relevant benchmark, and sensitivity to different tax assumptions.

…and what’s the plan for the off ramp?

I live in the Lehigh Valley, PA

but I currently serve 22 multi-millionaire families in CA and WA

…because I waited around for them to find me?

…as a generalist?

…3,000 miles away?

…with no personal brand?

not a chance that would have ever happened.

“You need to diversify and sell immediately.”

maybe. maybe not.

If you’re 35 years old with $10 to 15M in company stock, selling half your position could trigger millions in capital gains taxes.

the reality is many people don’t WANT to sell.

for a TON of reasons.

we all know the potential pitfalls and rules of thumb.

sometimes the better answer is a combination of:

> systematic selling with price targets
> options overlay
> charitable gifting
> tax aware overlay
> borrowing against shares

diversification and/or hedging is the objective.

liquidating stock isn’t the only way to get there.

when people have conviction, the worst thing you can do is try to FORCE their hand over and over again without proof of concept and providing all the options.

quick way to lose trust and the confidence that comes with understanding their goals and objectives.

By far the most rewarding thing about this job is getting involved in my clients lives

staring at numbers and emails all day is incredibly mundane until you learn about what the money is for and WHY

managing a large, publicly-traded, concentrated stock position can get pretty complex

for some clients, we might have as many as 4 separate accounts, each serving a completely different purpose:

1. Borrowing collateral

shares pledged to support a securities-backed line of credit or box spread borrowing strategy.

provides liquidity without immediately selling stock, realizing capital gains, or disrupting the investment position.

of course, this introduces leverage, collateral requirements, and forced liquidation risk....

2. Tax-aware long/short

a portfolio using long and short extensions on the underlying that's designed to systematically harvest losses

these can help offset capital gains as we gradually unwind the concentration

3. Direct hedging / options overlay

covered calls, protective puts, collars, exchange fund replication, or other option strategies directly against the concentrated position

manage downside risk, generate option premiums, and potentially establish a more predictable range of outcomes without immediately selling the underlying shares

4. Long-term hold / charitable

highly appreciated shares that we deliberately avoid selling or hedging for some reason

these might be earmarked for future charitable contributions, donor-advised funds, or long-term estate planning

the important part is that these aren't 4 independent investment strategies in a vacuum

they're 4 components of ONE coordinated plan focused on

> liquidity
> tax efficiency
> downside protection
> charitable wealth transfer
> strategic liquidation

I practice a version of wealth management that barely existed when I started my career

old model:

> stale quarterly performance reports
> paper account statements in the mail
> 2 to 3 hour sessions in-person at the advisor's office
> semi-annual or annual touchpoints
> "sorry, we can't talk about tax"
> reviewing what already happened

new model:

> multiple live financial dashboards for clients
> near constant communication and iteration
> texts, phone calls, sessions via Zoom / Google Meet
> 30 to 60 minute quick-hitting meetings
> tax considerations embedded in every decision
> planning around what's happening NEXT

an ISO exercise, a tender offer, an IPO, a trading window, sale of business...

these decisions don't conveniently happen during your annual financial review

and the financial consequences of getting them wrong can dwarf an entire decade of "show me your investment returns"

you could have 10 *years* to exercise your incentive stock options after quitting your job…

...but you might only have 3 *months* to preserve their favorable ISO tax treatment

the difference could be worth 6 figures

example:

CA resident leaving a company with 10,000 vested (but unexercised) ISOs:

> Strike: $5
> FMV: $55
> total bargain element: $500,000

Exercise within 90 days of termination??

1. keep ISO status

2. no *regular* income tax upon exercise

3. hold the shares long enough, and future appreciation may qualify for favorable federal long-term capital gains treatment (1+ year holding period)

But…

the $500K bargain element can trigger substantial federal AND California AMT.

you could owe 6 figures in taxes on shares you haven’t sold, potentially in a company that isn’t even public yet.

fail to exercise within 90 days??

1. your options may still be exercisable, but generally lose their ISO tax treatment (convert to NSOs)

2. $500K spread becomes ordinary compensation income upon exercise (taxed at higher ordinary tax rates)

3. you don't have a choice in this, this is how it's written in the tax code

at the highest marginal rates:

> Federal: 37%
> California: 13.3%

potentially ~$251,500 in income taxes before payroll taxes, without selling a single share

California also doesn’t offer preferential capital gains rates

so what’s the right move?

you are choosing between:

> exercising early, preserving ISO treatment, but potentially triggering AMT in that tax year and tying up cash in illiquid shares

> exercising later, potentially paying higher ordinary income taxes, but preserving liquidity and delaying investment risk

before leaving your employer, confirm BOTH the contractual exercise deadline and the ISO tax deadline.

then model the tradeoffs with a qualified tax and investment professional...

Narrarator:

“it turns out that Mark could not, in fact, enjoy a peaceful Sunday with his family”

tired parent weekend hack:

Cracker Barrell has this awesome family meal for and they deliver on Uber Eats

pancakes or French toast + all the family sizes sides for $55

it’s a TON of food for 4 so we leftovers for at least a few days

Tough to describe

“well, at least we get a big tax deduction.”

don’t assume you’re getting a massive mortgage interest deduction.

the Federal deduction is generally limited to interest on $750,000 of qualifying acquisition debt.

on a $2,000,000 loan, you’re eating all of the interest on the remaining $1,250,000 without getting any tax deduction at the Federal level.

there ARE other strategies worth exploring:

>> interest tracing:

borrowing against your home or portfolio and using the proceeds for investments or business purposes may allow interest deductions under different rules, based on how the borrowed funds are redeployed

>> box spread borrowing:

can provide an alternative way to borrow against a taxable portfolio, with potential capital loss treatment rather than a traditional interest deduction, subject to the specific tax treatment

neither is a perfect / magic workaround for the $750K limit.

both should be considered as POTENTIAL alternatives to traditional financing but reviewed with qualified tax and investment professionals.

nothing says “happy open enrollment season!” like Accidental Death and Dismemberment

“Are we crazy to spend $5M on a house?”

not necessarily.

this is what matters:

> $600K in annual cash compensation $2-3 million TC)
> Significant equity compensation
> Substantial existing liquid assets
> 6 figures of projected annual surplus cash flow even AFTER taxes, lifestyle, and housing costs

a $20K monthly mortgage payment sounds insane to most people.

it’s objectively an enormous fixed obligation every month….

but the right way to evaluate affordability isn’t to look at the mortgage payment in isolation.

you have to model:

> Cash compensation
> RSU vesting and liquidation
> Taxes across the board
> Living expenses
> PITI on a multi million dollar loan
> Housing carrying costs (above PITI)
> Liquidity and downside scenarios

then project it all forward.

what does the cash flow say?

what trade offs are you willing to make?

you might find it crazy to spend $20 - $25k / month before spending a dime on your family.

but $3M + doesn’t necessarily buy you the house you might want depending on the area….

Huge opportunity to work with a heavy hitter and genuinely good dude!

I had a conversation with a new Google exec recently who asked me to explain EXACTLY how RSUs work

not the technical jargon.

the actual mechanics of what happens when they vest and release.

it's his first time working at a public company with a LIQUID stock program.

here’s the explanation I gave him:

1. Your grant is denominated in SHARES, not dollars.

let's say Google grants you 4,000 RSUs vesting over 4 years.

that’s 1,000 shares per year (assuming annual vesting).

the number of shares is fixed, but their value isn’t.

if GOOG is $150 when 1,000 shares vest, that’s $150,000 of compensation.

if GOOG is $250, that’s $250,000.

same shares. Very different paycheck.

2. When your RSUs vest, you owe ordinary income tax.

the value of the shares on the vesting date is generally treated as W-2 compensation.

1,000 shares vesting at $200/share?

that’s $200,000 of taxable wages.

you don’t need to sell a single share to trigger that income.

3. Your employer typically withholds taxes automatically.

this is usually done by withholding SHARES or selling enough shares to cover payroll taxes.

for example:

> 1,000 shares vest
> 400 shares withheld/sold for taxes (Fed, State, FICA)
> 600 net shares deposited into brokerage

the actual number withheld depends on the applicable withholding rules.

4. Withholding is NOT the same thing as your actual tax liability due on the vesting.

this is where people get tripped up.

the standard Federal supplemental wage withholding rate is 22% up to $1M and 37% above that threshold.

but if you’re in the 35% or 37% marginal Federal bracket, 22% withholding may leave you with a significant tax bill.

and that’s before state level taxes.

5. Your cost basis on the net shares resets to the price per share at vesting.

If 1,000 shares vest at $200, your aggregate cost basis is generally $200,000.

Sell immediately at $200/share?

generally, no additional capital gain.

sell later at $250/share?

now you’ve got $50,000 of capital gains.

sell at $175?

you’ve got a $25,000 capital loss.

6. Your capital gains holding period STARTS at vesting.

not when the shares were originally granted.

hold the vested shares for more than 1 year and subsequent appreciation generally qualifies for long-term capital gains treatment.

sell sooner and any gain is generally short-term.

7. Once vested, they are YOUR shares to hold outright.

subject to company trading policies, blackout windows, and other restrictions, you can generally:

> Sell immediately
> Hold indefinitely
> Sell a portion
> Transfer to another brokerage
> Donate appreciated shares
> Gift to an individual

my preference for most employees and execs?

have a systematic plan to sell at least a portion of every vest.

for this case, we're selling enough to satisfy a very large mortgage payment and holding the rest until our price targets are met.