Harry and Sally Henderson, Greenwich, CT Presentation by

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Harry and Sally Henderson, Greenwich, CT
Presentation by
Strategic Wealth Management
Private Banking
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Harry and Sally HendersonAgenda

• Our Philosophy
• Your Needs
• Individual Solutions
• Analysis of Henderson Hardware Inc.
• Asset Allocation
• Insurance Retirement
• Estate Planning

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Private BankingOur Philosophy

• One of the global leaders in banking worldwide
• Private Banking as key division, building on
  expertise and know-how of the groups global
  network
• Private Banking philosophy centers on
  relationship approach

Service and know how leading to results for the
benefit of our clients
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Private BankingIndividual Solutions
Your Needs
Translation by our Specialists
Relationship--Manager
Overview
Private Financial Planning
Liquid assets and securities
Account Management
Real Estate
Real Estate Advice
Partnerships
Structured Finance
Fine Arts
Art Consulting
Matching your Needs with our Expertise
Estate- and Trust Management
Transfer of Wealth
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Your Objectives Harry and Sally Henderson

• Status Quo
• - Harry (70) and Sally (65)
• - 3 married children and 5 grandchildren
• - Harry owns the retail business Henderson
  Hardware Inc. (HHI)
• - none of children are willing to take over the
  business
• - highest tax bracket (39.6)
• - basic health insurance is provided
• Total Assets
• Investment Portfolio (AOL, GE) 1.8 Mio
• Loan to HHI 0.5 Mio
• Pension Plan 1.0 Mio
• Personal Residence 3.5 Mio
• Business (HHI) 6.0 Mio
• Jewelry Art 1.0 Mio
• Stamp Collection 0.3 Mio
• Goldbars 0.4 Mio
• Net Worth of Total Assets 14.5 Mio

Annual cash flow salary 300,000 dividends
7,000 interest 30,000 total
annual cash flow 337,000 tax payments (39.6) 13
3,452 total annual cash flow after taxes 203,548
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Your Needs Harry and Sally Henderson

• Personal Profile
• Harry
• - retirement from business
• - hobbies golfing travelling
• - spending time with grandchildren
• - active community member and donator to charity
• - funding a new building project at his alma
  mater
• Sally
• - purchase of vacation home in Arizona
• - health concerns
• Harry and Sally
• - basic will leave assets to each other after
  one died

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Selling Henderson Hardware Inc.(HHI)Evaluation
of HHI

• Method Multistage growth model
• EBITDA 1,200,000
• Discount rate Retail hardware business ? 19,8

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Selling Henderson Hardware Inc.(HHI)
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Selling Henderson Hardware Inc.(HHI)Options

• Sell HHI to your grandchild, Jeff Henderson
• Sell HHI to the employees
• Sell HHI to an unrelated third person

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Selling Henderson Hardware Inc.(HHI)

• Sell HHI to the employees?

Harry Henderson
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Selling Henderson Hardware Inc.(HHI)

• Sell HHI to an unrelated third person ?

Potential Buyer The Home Depot
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Selling Henderson Hardware Inc.(HHI)

• Founded in 1978, The Home Depot currently
  operates more than 860 stores in the United
  States, Canada, Puerto Rico and Chile
• They expect to be operating over 1,600 stores in
  the Americas by the end of the year 2002
• Only 5 stores in Connecticut
• Expected price for HHI

6,000,000 (90 5,400,000)
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Profile Needs

• Retirement with solid financial situation
• No more regular salary from the business
• Necessity of regular cash flows
• Possibility of irregular withdrawals out of the
  portfolio
• Regular transfers of assets to children for tax
  purposes
• Construction of a well diversified portfolio

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Why diversify? The efficient
frontier
A well diversified portfolio higher return, same
risk
Return
Risk
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Asset Allocation - Approximate Figures
Global Diversification USA
70 Europe 25 Asia 5
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Proposal Discretionary Portfolio Management

• Experienced portfolio managers
• Little time commitment
• Balanced model fits best your requirements
• Ability to withdraw money
• Flat fee structure

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Equities Portfolio

• Top down approach
• for country and sector allocation
• Bottom up approach
• for stock picking
• Current sector allocation
• automobiles 6.5
• chemicals/pharmaceuticals 27
• consumers 9
• financial services 13
• technology 21,5
• telecommunication 23

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Bond Portfolio

• Will be designed according to liquidity needs
• Wide diversification with different maturities
• Consists of
• US-Treasuries
• Corporate Bonds
• Limited amount of high-yield bonds

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Your house in Arizona

• Selling price approx. 330,000 ?
  mortgage financed due to certain tax issues
• Golf Club Membership 50,000
• Golf Club annual fee 5,000

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Income during your retirement

• Henderson Hardware Inc. Pension Plan
  - monthly payments in
  favour of Harry Henderson - beneficiary Sally
  Henderson - certain tax advantages
• Charitable Trust
• Portfolio

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The guide to your Health Insurance

• MediCare - Federal
  health insurance program for Americans age 65 and
  over - covers certain basic
  medical expenses
• MediSup (Medicare supplement insurance)
  - Insurance on a private basis to cover
  the gaps of MediCare
• Long-Term Healthcare -
  Services beyond medical/nursing care not covered
  by MediCare and MediSup
  

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Life Insurance Liquidity for estate tax purposes
Insurance Company joint policy
Premium
Face amount
Owner Harry Sally Henderson
Beneficiary Last to die
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Optimizing asset structure and tax minimization
opportunities
entrepreneurship
estate
retirement
Assets accumulated
financial portfolio
?
Proceeds from selling the business
real estate investment
pension plan
health insurance
share
create
transfer
enjoy
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Sharing Tax free gifts to family members
Cash
Equities
4
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gift to family members 10,000 annually
Bonds
Property
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Bank a/c Henderson

• Benefits
• enhances life style of children
• allows tax free transfer of assets

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SharingCharitable Remainder Trust
Charitable trust
Income financing lifestyle

• Benefits
• No CGT
• Receiving income
• receive tax deduction now
• contribute to charity

remaining assets to charity once deceased
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TransferTrust for the grandchildren
Jeff (college, first house)
Harry Sally Henderson
Jim (lifestyle support)
Jill (college, first house)
Jan (college, first house)

• Benefits
• avoids tax
• helps grandchildren get a start in life
• potential tax saving of 1.1 m

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TransferHave your Will create a credit shelter
trust

• Definition
• trust created via your Will
• enables retention of gift tax credit
• Benefits
• ultimate transfer 2 m. in assets to the children
  tax free
• surviving spouse receives income from assets
  during lifetime
• potential tax saving of 550,000

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Your Team of Partners
Enjoy... Share... Transfer
Relationship-Manager Oliver Stich, Frankfurt,
Germany Investment Banking Division Christian
Nolting, Essen, Germany Account-Manager Daniel
Tritschler, Stuttgart, Germany Insurance
Retirement Juergen Wolff, Halle/S.,
Germany Estate Planning Gisela Wuehrer,
Vienna, Austria Keenan Bunning, Sydney,
Australia