What do you get when you sign up for a Compound financial advisor?1
Wealth management is an ongoing journey. Your advisor is an expert guide that has the resources and experience to save you time and ensure you make the right decisions. They proactively monitor your financial health to present opportunities, detect issues, and accelerate your wealth creation.
Compound financial advisors are equipped to help technology employees. In addition to our software-first approach, we have unique expertise in helping you navigate your illiquid company equity, technology career path, liquidity options, and alternative investments. In other words, we’re as comfortable with QSBS, crypto taxes and diligencing VC opportunities as we are with index funds and bond portfolios.
By working with a financial advisor, you can achieve financial peace of mind and focus on your passions instead of diving deep into financial complexities. We believe the next generation of wealth will be built through technology companies, and we would love to help you along the way.
In this guide, we’ll cover:
- The Private Wealth Management Journey
- What an Advisor Does For You
- Communication Cadence
The Private Wealth Management Journey
A typical first year with your financial advisor will be about assessing your financial position, laying the foundation for future success and making some initial changes.
Phase 1: FINANCIAL HEALTH FOUNDATION
- Build a strong, trusting relationship with your financial advisor through a comprehensive review of your net worth, liabilities, and potential
Phase 2: GOALS & WEALTH STRATEGY
- Articulate and assess your wealth goals, upcoming life events, and timing for key decisions
- Around the end of your first quarter with Compound, your financial advisor delivers a 12-month plan to accelerate your time-to-goal
Phase 3: WEALTH STRATEGY IMPLEMENTATION
- Execute the recommendations in the wealth strategy across all assets
- This phase moves at the speed of your decisions and how quickly you want to implement the strategy
Phase 4: WEALTH STRATEGY OPTIMIZATION
- Continually analyze value changes of illiquid and liquid assets. You can adjust and expand the plan as needed (this includes estate, philanthropic, and cash flow requirements)
- Your Advisor is focused on your financial health and goals, monitoring your financial vital signs to alert you to adjustments that improve your financial health
Phase 5: WEALTH REVIEW
- Revisit financial health, goals, changes, and priorities to adapt wealth strategy
- Regular access to Compound insights on markets, start-up trends, and suitable investment opportunities
- Upon review, there may be a revision to your strategy, additional Implementation and ongoing Optimization as the cycle continues for Year 2
What an Advisor Does For You
What services will your financial advisor provide you? Depending on the service tier you select, these are some of the services you can outsource to your financial advisory team and questions we encourage you to ask of them:2
Diversifying concentrated stock positions
- What is the appropriate amount to hold or sell of each equity based on my goals?
- How much should I sell? At what price and schedule?
- In what order should I sell my various types of equity in order to minimize taxes?
- How can I implement option strategies to protect my concentrated position, or hedge its risk, in part or in whole?
Company equity strategy
- How do I minimize taxes on my company equity? Which options should I consider exercising and when?
- How can I finance (pay for) my option exercise?
- Is my equity eligible for the Qualified Small Business Stock (QSBS) exclusion? (QSBS typically applies to founders or early employees.)
Financial planning
- How should my assets be allocated to meet my lifestyle spending goals?
- How much do I have to save each year to buy a vacation home in three years?
- How soon do I need to start saving for my children’s college tuition?
- How do I achieve my philanthropic giving goals?
Asset allocation and investment management
- Should I own stocks, bonds, and/or alternative investments? If so in what percentages?
- Does it make sense to invest in alternative investments? Which ones?
- How can I protect myself against inflation?
- How much should I allocate to angel investments?
Lending facilitation
- How do I find the best borrowing option to buy a home?
- What are the available options to unlock liquidity using my my public or private stock as collateral?
- How can I borrow at the cheapest rates and highest lending value?
- How much debt should I keep on my personal balance sheet?
Tax strategy
- How many ISOs can I exercise before being subject to the Alternative Minimum Tax (“AMT”)?
- How much in taxes can I save each year by moving states?
- What are the tax strategies that maximize my returns?
- How can I fund my day-to-day spending without triggering tax events?
- How much stock should I sell at a loss to offset my capital gains for the year?
Estate and tax planning
- How should I seek the right legal advice from an attorney to make sure my assets are passed to my family, friends, or charity in the most tax-efficient way?
- How should I seek the right legal advice from an attorney to make sure my assets are protected from probate?
- How can I maximize my QSBS exemptions?
- How should I seek the right legal advice from an attorney to make sure my crypto portfolio is passed on properly?
- What are the financial and tax considerations around setting up a trust outside my high-tax state to minimize taxes upon the sale of my company equity?
Communication Cadence
Planned Quarterly Meetings
After the first month, most Compound Private Wealth Management clients have quarterly meetings with their personal financial advisor. These meetings are designed to review your situation and optimize your financial life. Your financial advisor will prepare any materials and analysis in advance to ensure an efficient meeting.
Here are the things you’ll review in a quarterly meeting:
- Financial goals. Have your financial goals changed? Are you on track to meet your previously defined goals or do we need to adjust your strategy?
- Life changes. Are there any major changes in your life that impact your financial strategy or goals? Some of these changes include a job change, getting married/divorced, having children, or moving states.
- Company equity. Are there any new opportunities to execute on with your options or shares? Examples could include company valuation changes or additional vesting events impacting your broader financial strategy.
- Investment portfolio. How has your portfolio been performing? Are there any adjustments we need to make to maintain the allocations according to your plan?
Continuous Support
In addition to the regularly scheduled meetings, you’ll also have access to your financial advisor as needed for further support. You can contact your financial advisor via email or set up a Zoom meeting and you can expect a same-day response for messages received prior to 4:00 pm PT.
Ongoing support is primarily for time-sensitive planning needs or sudden changes. Here are a few examples of financial events that could prompt contacting your financial advisor outside of the scheduled meetings:
- Company tender offer
- Founding a company (runway calculation, legal docs)
- Company IPO
- Changing jobs or a new job offer
- Volatile market conditions
- Home purchase
- Alternative investment opportunities
- Borrowing opportunities
Market Expertise
Finally, we make sure you are up to date with the latest market news, industry deep dives, and wealth-planning resources. We regularly publish new content in a few publications:
- The Manual – a curated library of wealth planning resources for startup founders and employees.
- The Archive – a collection of long-form essays exploring the marginalia of financial and startup history.
- Industry deep dives explaining complex financial topics.
- Additional content series in production that cover alternative investing and current market conditions.
1 Being an SEC-licensed financial advisor, we describe what you can expect from Compound financial advisors in great detail in our Form ADV, especially Part 2A “Brochure” and Part 3 “Client Relationship Summary.” We strongly encourage you to read those documents, but it’s also helpful to get some details in a less formal, more accessible way, so we composed this post to further elaborate on the Compound Private Wealth Management experience.
2 For further details, please see your Services Agreement and related documents.
