Financial Advisor Suggests Loan on Paid-Off Property for $40M Net Worth Couple

The Predicament: High Net Worth, Low Liquidity

• 💡 A couple with a $40 million net worth faces a financial predicament where their money is not liquid enough to supplement their income.
• 📈 Their financial advisor suggested taking a loan on a paid-off vacation property, which the caller finds concerning.

Business Investment and Lack of Control

• 💰 $30 million of their net worth is invested in the husband's business, which is valued at nearly a billion dollars.
• 🚫 The husband, despite being an owner, is not on the board of directors, preventing him from making decisions on when funds can be accessed.
• ⚠️ This lack of control over a significant portion of their wealth is identified as the core problem.

Income, Spending, and Mismanagement

• 💸 The couple has $10 million in accessible assets and the husband earns $400,000 a year from a 100% commission-based role.
• 📉 They were accustomed to redeeming $1-1.5 million annually from the business to supplement their lifestyle, covering expenses like two homes, staff, and a horse farm.
• 🗣️ The caller expresses disbelief that these expenses, even with luxury spending like chartering yachts and flying private, would reach $1.5 million annually.
• ⚠️ The couple spent money assuming they could redeem shares each year, unaware of the board's control over redemptions.

Addressing the Core Issue

• 🏠 Borrowing against their paid-off vacation property is strongly advised against, as it would mean taking on unnecessary debt.
• ✂️ The immediate solution proposed is to drastically cut their lifestyle to align with their accessible income and assets.
• 🤝 A crucial step is for the husband to have a direct conversation with the business partners about accessing his $30 million investment, especially at his age (56) after 26 years of service.

Business Partners' Stance and Next Steps

• 🚫 The business partners have stated they will never prioritize shareholder redemptions over company growth.
• ⏳ While a divestment option exists in four years, the caller warns against losing the significant gains made on their initial investment.
• 🚀 The advice is to force the redemption of shares rather than accepting the partners' dismissive stance and continuing to live with a lack of control over a substantial portion of their net worth.
• 💡 A new financial advisor is recommended, as the current one's suggestion to borrow on the lakehouse is deemed inappropriate.