Accumulating assets as a partner

Background

Our client has worked in the private equity industry for 15 years and is currently a Managing Director at the firm she works at. She is 40, married with two children.

Key objectives

Our client was keen to put a plan in place to re-invest part of her income and carry into a diversified portfolio for long-term growth, alongside repaying a mortgage and saving for school fees. Liquidity was a key overall consideration as she also had to invest within her firms PE funds.

How we helped

At the outset, we wanted to get a good understanding of her financial position and goals. Using our wealth framework we were able to put her assets into ‘pots’, helping build a solid foundation for structuring her different investments and objectives. We identified three areas to consider as she planned her wealth:

Private commitments, carried interest and FX: Our client was required to contribute to her firms private funds and likely to receive carried interest in the future, presenting liquidity and currency considerations.

Mortgage repayments: Having moved home and taken out a large mortgage, she wanted to know whether it was better to repay the mortgage early or to invest more, whilst managing liquidity in light of possible capital calls.

Planning for tax bills: She is now required to personally pay her tax, so needs to retain sufficient liquidity.

Lifestyle	Cash	Nest egg	Growth	Firm
Family home (£2m) and rental properties in London (£2.5m)	c.£100k for day to day expenses	£1m in GIA + ISAs £300k	$2m in PE investments + £300k in pensions	$1.5m carry

Solutions and options

Armed with a clear picture of our client's financial situation, challenges and aspirations, we implemented a number of solutions to help her achieve her goals. We created a cashflow planning model to help manage liquidity for cashflow, capital calls and future carry.

To help with liquidity, we arranged a short-term liquidity strategy to meet three core goals: cover mortgage overpayments, expected capital calls over the next 12 months, and to pay estimated tax bills. We proactively manage this across gilt portfolios and high-interest accounts, keeping under regular review.

For longer term planning, we consolidated her and her husband’s pensions to provide a more consistent investment approach. To grow their nest egg, we designed a scalable, balanced investment portfolio that allows clients to efficiently add funds over time, with the long-term goal of generating a steady income stream for the family. We also set up a separate USD portfolio invested in direct equities, to provide a higher-risk exposure to public markets and flexibility to invest in different currencies. She liked our investment approach which analyses individual companies and provides a complementary approach to, and diversification from, her private investments.

When carry or bonuses are received, we agreed a portion to allocate to gilts to cover tax liabilities, with the remainder set aside for capital calls or invested. For convenience, we also arrange for upcoming capital calls to be paid directly from our client's accounts.

Outcome

Our client now has a structured, flexible plan for the future that balances liquidity, investment growth and long-term financial security.

Cashflow modelling for a Private Equity Partner

Assumptions	GIA	ISAs	Pensions (Non accessible)	Pensions (Accessible)
Starting value (age 40)	£1,000,000	£300,000	£300,000	£0
Performance (balance for illustration)	6.24%	6.24%	6.24%	6.24%
Inflation	2.00%	2.00%	2.00%	2.00%

 

_{Source: Rothschild & Co, Bloomberg Data from 31 December 2002 to 31 December 2024.}

_{The New Court Fund GBP inception date was 14 July 2015. Performance for periods prior to inception date is the Rothschild & Co Wealth Management UK Ltd GBP Balanced composite, adjusted to reflect the fund's 1% annual management charge and 0.06% operational costs. Performance data is net of fees. Data post 30 September 2007 is net of actual client fees incurred. Data prior is actual gross performance less current average client fees.}

_{Past performance is not a reliable indicator of future performance and the value of investments and the income from them can fall as well as rise.}

_{The above graphs are for illustrative purposes only. The information above is not intended and should not be construed as tax advice. Each investor should seek their own independent tax advice}