After several years of diminished interest in the area of single stock concentration risk management, the discipline is once again becoming increasingly important to private clients due to the convergence of several trends. Thanks to the Fed, the stock market has delivered impressive gains and many investors own stocks that have appreciated dramatically. At the same time, tax rates have increased, leaving many investors reluctant to sell their stocks due to the immediate and large capital gains tax an outright sale would trigger. A California resident who sells shares that qualify for long-term capital gain treatment, for example, must pay a combined federal and state tax rate exceeding 37%, the highest in the nation. In addition, many investors are hesitant to sell because they believe in the continued upside potential of their stocks.
Despite the increasing interest in the discipline of single stock risk management, however, Wall Street has seemingly abandoned this area, and there has been very little innovation in this field since the Constructive Sale Rules were implemented in 1997. Amazingly, Wall Street continues to offer - and advisors and investors continue to use - products that were specifically created in response to those rules as well as an antiquated and arbitrary margin rule system that has long since been overhauled and modernized (almost a decade ago, in 2005), rendering many of those tools obsolete for UHNW investors.
At the same time, the convergence of technology, asset management and risk pooling/insurance has fostered the evolution of new and non-traditional risk mitigation solutions, such as a recent invention rooted in the principles of modern portfolio theory and the insurance concept of risk pooling, that enables advisors and investors to embrace a long-term, strategic approach to managing the downside price risk associated with continued ownership of appreciated single-stock positions in a cost-effective manner, while retaining full upside potential and all dividends and distributions.
Join Thomas Boczar and Elizabeth Ostrander of Intelligent Edge Advisors to learn about the resurgence of this important discipline and get up to speed on the latest tools and techniques available to UHNW investors interested in tax-efficiently hedging and/or monetizing their low-basis stock positions.
CEO, Intelligent Edge Advisors
Thomas Boczar, CEO of Intelligent Edge Advisors, is a pioneer in the discipline of concentrated wealth advisory and a recognized expert in the tax-efficient monetization of privately-owned businesses, commercial real estate and concentrated single-stock positions. Tom began his 27 year career on Wall Street as a tax accountant with Touche Ross, then practiced law at Mudge Rose and Cahill Gordon specializing in M&A and corporate and municipal finance. Tom has represented owners of privately-held companies across many industries in liquidity-generating transactions and participated in structuring transactions worth billions of dollars. Tom has also structured and arranged the execution of hedging & monetization transactions worth billions of dollars on behalf of the owners of concentrated single-stock positions. Throughout his career Tom has initiated and managed successful strategic alliances with large financial and professional services firms. Tom has authored over twenty-five scholarly articles, a number of which have won prestigious awards, on various issues surrounding monetizing concentrated wealth. Tom is regularly invited to speak/lecture at high profile conferences. Tom earned the CFA and CPWA designations, and holds an LL.M. in Taxation from New York University School of Law and JD, MBA, and MPAcc degrees from University of Miami.
Senior Vice President, Director of Business Development, Intelligent Edge Advisors
Elizabeth Ostrander is Senior Vice President and Director of Business Development at Intelligent Edge Advisors, an investment bank that works exclusively with financial advisors to plan, structure and execute liquidity events for their clients who own privately-owned businesses, commercial real estate and highly appreciated publicly-traded stock. Elizabeth works with independent broker-dealers, custodians, banks and wealth management firms to make Intelligent Edge’s service offering available to financial advisors so they can tax-efficiently monetize the concentrated wealth of their private clients. Elizabeth has authored numerous published articles on the tax-efficient monetization of businesses and real estate and has been interviewed by major publications on this topic. She is regularly invited to speak at industry conferences and events. Elizabeth holds a B.A. from Boston College and is a CFA Charterholder.