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Athena Capital Advisors releases white paper to guide individuals with new wealth


Athena Capital Advisors has released a white paper that offers guidance for individuals with new wealth who are deciding how to invest in order to achieve long-term financial goals. 

The paper addresses in particular how a meaningful allocation to private investments can be accommodated without creating significant liquidity risk, both during lifetime and at death. Athena is an independent, privately owned, registered investment advisor serving high net worth private clients, foundations and endowments.

Titled, “Choosing the Right Asset Mix,” the paper was authored by Athena Capital Advisors’ William McCalpin, managing partner, and Jeremy Evnine, senior advisor, quantitative research.

“Individuals and families with new wealth frequently want to know how to allocate their capital in order to accomplish long-term objectives for themselves, their heirs, and other beneficiaries,” McCalpin says. “Many want to incorporate private investments into their planning, especially if the wealth has resulted from entrepreneurial activity. While such investments can compound capital at a faster rate, they also introduce potential liquidity challenges.”

Athena constructed a Monte Carlo simulation model to generate outcomes for different asset mixes. The authors used the model to evaluate results over a 40-year period for a hypothetical couple with significant new wealth.

The paper concludes that a strategy with some allocation to private investments can produce more favourable financial outcomes; however, that allocation should be paired with a complementary portfolio of liquid investments, as well as life insurance, in order to ensure sufficient liquidity both during lifetime and at death.

“For the committed private investor, life insurance delivers liquidity at the critical time when estate taxes are due,” says McCalpin. “It can ensure continuation of an investment strategy developed thoughtfully over a period of many years and, simultaneously, facilitate early distributions to heirs and other beneficiaries.”

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