,000,000 from a $3,000,000 portfolio to start a new business. The client's balance falls to $2,000,000. A 1% AUM fee falls from $30,000 to $20,000 a year, so the advisor's fee falls by
0,000 a year. Valorem's
5,000 flat fee does not change.
Illustrative. $3,000,000 starting portfolio, 1% advisory fee.
Financial Decisions Rarely Happen In Isolation.
A major financial decision can affect several parts of your financial plan simultaneously. We seek to understand how those changes affect the rest of your finances before making a recommendation.
How one financial decision touches the rest of a plan Retirement Portfolio withdrawals: Determine which accounts should fund spending and in what order once employment income stops.Roth conversions: Evaluate whether lower income years after retirement create an opportunity for Roth conversions before required distributions begin.Social Security: Evaluate when each spouse should claim benefits in the context of the household’s retirement income needs.Medicare and IRMAA: Account for how taxable income can affect Medicare premiums, including the two year income lookback used to determine IRMAA.Taxes: Coordinate withdrawals, Roth conversions, and other income to manage the tax brackets used throughout retirement.Cash reserves: Determine how much near term spending should be held in cash so portfolio withdrawals are less dependent on market conditions.Estate plan: Review account ownership and beneficiary designations as accounts are consolidated, rolled over, or otherwise changed at retirement.Insurance: Review coverage that ends with employment and determine whether any of it should be replaced.Business sale Transaction structure: Understand how the buyer will pay for the business, including cash at closing, rollover equity, earnouts, deferred payments, and compensation for ongoing services.Tax treatment and QSBS: Determine how the transaction will be taxed and whether any portion of the gain may qualify for QSBS treatment or other favorable tax treatment.Tax reduction strategies: Evaluate strategies that may reduce or offset the tax created by the sale, including charitable planning and portfolio tax loss harvesting where appropriate.Estimated tax payments: Coordinate with the client’s CPA to estimate the tax liability and make sure required tax payments are made on time.Rollover equity: Evaluate the concentration, liquidity, and risk of any ownership that remains invested in the acquiring company after closing.Investment of proceeds: Build a plan for investing the proceeds based on future spending needs, risk tolerance, taxes, and the client’s existing portfolio.Income after the sale: Determine what replaces the income previously generated by the business, including salary, consulting income, earnout payments, investment income, and portfolio withdrawals.Estate and gifting: Evaluate whether estate, gifting, or charitable decisions should be made before the transaction changes the value or ownership of the business.Concentrated stock Diversification alternatives: Compare outright sales, tax aware long short strategies, exchange funds, and other approaches that may reduce concentration.Tax cost of selling: Measure the embedded gain and show how different sale amounts would affect the client’s tax liability.Tax loss harvesting: Identify losses elsewhere in the portfolio that may offset gains realized while diversifying the position.Charitable planning: Evaluate whether appreciated shares should be donated rather than sold when charitable giving is already part of the plan.Equity compensation: Coordinate the existing position with future RSU vesting, option exercises, or other compensation that may add more exposure to the same company.Risk reduction: Determine how much concentration is appropriate based on the client’s net worth, income, liquidity needs, and tolerance for company-specific risk.Portfolio reinvestment: Decide how proceeds should be reinvested so diversification results in a portfolio that better reflects the client’s broader goals.Tradeoffs and implementation: Help the client understand the tax, liquidity, cost, and investment tradeoffs of each diversification approach before choosing how to proceed.Second home purchase How to fund the purchase: Compare paying cash, taking a mortgage, or selling investments to fund the purchase.Cost of using portfolio assets: Model how withdrawing investment assets affects future portfolio value, retirement funding, and long term financial flexibility.Borrowing decision: Compare the cost of a mortgage with the expected benefit of keeping more assets invested and preserving liquidity.Ongoing carrying costs: Incorporate property taxes, insurance, maintenance, renovations, financing, and other recurring expenses into the financial plan.Liquidity after closing: Determine how much cash should remain available after the purchase for repairs, improvements, taxes, and other unexpected costs.Tax considerations: Evaluate the tax impact of how the property is financed and whether it will be used personally, rented, or both.Ownership and estate planning: Determine how the property should be titled and how ownership fits within the client’s broader estate plan.Insurance and liability: Review property, liability, and umbrella coverage to determine whether protection should change after adding a second home.
Index funds at the core. Modest thematic tilts at the edges.
We generally use diversified, cost effective index funds for the majority of a client's public market exposure. We reserve a smaller portion of the portfolio for specific thematic tilts where we believe the opportunity is compelling.
Thematic tilts around an index fund core Critical minerals. Critical minerals are needed to produce weapons, electrical equipment, vehicles, and advanced electronics. Demand is growing, but new mines take years to approve and much of the world’s refining capacity is concentrated overseas. That creates an opportunity for companies that can build secure domestic supplies and process raw minerals into materials manufacturers can actually use.Hyperscalers. Google, Microsoft, Amazon, and Meta are spending nearly all of their free cash flow on AI infrastructure that they expect to benefit from long term. Each has a long track record of earning strong returns on invested capital, suggesting this buildout could create substantial long term value.Pharma and biotech. Medicine is entering a genuine scientific inflection point, from GLP-1 drugs to gene editing, just as the largest generation in American history reaches the age when healthcare consumption rises sharply. Major pharmaceutical companies also face a wave of patent expirations and need new products to replace lost revenue, creating opportunities for innovative biotech companies and the large acquirers able to develop, commercialize, and scale those assets.Asset backed credit. Banks are pulling back from specialized lending just as demand for capital continues to grow. Asset-backed lenders can fill that gap by making loans collateralized by tangible assets and contractual cash flows such as equipment, receivables, royalties, aircraft, and infrastructure. For investors, that can provide attractive income with strong protection in the event of a borrower default.Demographic driven demand. One of the largest generations in American history is retiring, creating two clear sources of demand. Healthier retirees are spending more on travel and leisure, while those reaching their 80s and beyond require more medical care and daily assistance. Senior housing and care capacity has not expanded fast enough to meet that need.Compute infrastructure. Open models are approaching frontier-level performance at a fraction of the cost, making AI practical for far more tasks. That should increase usage, and every additional token still requires chips, memory, networking, and power. Cheaper models therefore expand hardware demand rather than reduce it.Behind the meter energy. Access to power is becoming one of the biggest constraints on new data centers and industrial facilities. Grid interconnection can take years, while these businesses need electricity now. Companies that generate reliable power directly at the site can turn speed into pricing power.Defense technology. Modern warfare is shifting from a small number of expensive platforms toward thousands of low cost, autonomous, software defined systems. That is forcing militaries to spend on autonomy, counter drone technology, sensors, and the manufacturing capacity to produce them at scale.Cybersecurity. AI is changing the economics of cybercrime, making attacks cheaper, faster, and more scalable while making networks more expensive to defend. That gap should drive sustained security spending, because this is one of the few budgets a company cannot cut without immediate consequences.
Private investments can provide sources of return that are uncorrelated to public stocks and bonds.
We use private investments selectively when we believe they can improve diversification, return potential, or portfolio resilience beyond what public markets alone can provide.
What each type of private investment is Private equity: A broad category of investments in privately held businesses, ranging from buyouts and growth equity to secondaries and rollups. The source of return depends heavily on the approach, but may include improving a business, buying at an attractive price, using leverage, combining companies, or purchasing existing private investments at a discount.Private credit: Loans negotiated directly with companies rather than traded in public bond markets. Returns come primarily from the interest and fees borrowers agree to pay, often in exchange for accepting less liquidity or lending where traditional banks are less willing to do so.Venture capital: Equity investments in young companies where a relatively small number of successful investments typically generate much of the return. The payoff comes when a company grows from a small business into one worth many times the original investment.Real estate: Investments in physical properties or property-backed loans. Returns can come from rent, increases in occupancy, development or improvement of a property, and changes in the value of the underlying real estate.Infrastructure: Investments in assets such as power generation, utilities, transportation, and communications networks. Returns often come from long-term contracts, regulated payments, or recurring charges for the use of essential assets.Real assets: Investments in physical assets beyond property and infrastructure, such as farmland, timberland, and natural resources. Returns can come from selling what the assets produce, such as crops, timber, or energy, from leasing them to operators, and from changes in the value of the land and resources themselves.
A portfolio with private investments
Private equity Private credit Infrastructure Real estate Venture capital Real assets
Illustrative. Allocations vary by client and are not a recommendation.
Book a call with Valorem.
We can discuss your financial situation, what you are looking for from an advisor, and explore whether Valorem would be a good fit.
