John, a very sophisticated investor and business owner, had a potential opportunity he wanted to research. "I am considering putting some money with a friend of mine. He runs a managed futures hedge fund. I know managed futures was one of the few asset categories that did not fall with the market in 2008. Can you let me know what you think?" Our investment experts immediately went to work. SEI researches thousands of managers annually. But, what was the real issue?

John's personal business needed an investment of capital to support future growth. His investment portfolio already had a 20% allocation to alternative investments (which tends to be a less liquid asset class). While John was confident that the investment in his business was the right decision, he also knew that he would need to rely on his portfolio for income to support his lifestyle over the next two years. As we discussed John's personal, business and financial situation, he became visibly anxious. Almost instantly, John stopped talking in investment terms --risk, correlation, managed futures-and described what really mattered to him. This was the tipping point in the discussion. John's goal - his definition of success-was a portfolio that protected his lifestyle if the business struggled. Relief.

We looked at strategies that could help lower all the risks to John's lifestyle - not just the correlation risk that a managed futures investment may or may not hedge against. We provided multiple alternatives that included increasing his cash position, lowering his equity allocation, adding a new asset class (managed futures), lowering the volatility of his equity position (low beta) and hedging strategies. We scenario-tested each of these strategies under different market and personal conditions¹. The different scenarios allowed John to try on the advice, see the possible outcomes of different alternatives and make a more informed decision. Based on our recommendation, John decided to increase his cash reserves, increase his fixed income position, lower his equity position, and re-allocate his equity holdings to a strategy designed to dampen the effect of market volatility on his lifestyle portfolio. He chose not to invest in managed futures because he did not want to decrease his liquidity and because the goal of the strategy he chose met his investment objective of reducing the risk in his portfolio. This strategy was broad, diverse and took into account both John's business and lifestyle goals.

¹Results from scenarios are hypothetical and not meant to represent or guarantee any specific outcome. There is no guarantee that every possible scenario and/or condition is tested.

As a result, John felt confident. Not just confident in the solution but, equally important, he was confident that he had asked the right questions, examined each scenario and was solving for the real issue. He was now free to pursue the growth of his business aggressively and worry less about his lifestyle if something went wrong with the business. That's what really matters!

Susan and Jay are two successful professionals with one daughter in high school. They recently became more involved with charitable causes in their community. They give both time and money. Susan and Jay enjoy their involvement and want to continue, but their giving often feels disorganized and fragmented. Someone told them that they can get up to a 30% income-tax deduction if they act quickly and set up a family foundation before the end of the year. So, they came to us and asked, "Can you help us set up a foundation?"

Setting up the foundation is easy; but the care and feeding of it can be a challenge - unless you're ready for it. It is important to educate yourself and your entire family on the compliance, tax and governance issues. We asked Susan and Jay to think about the following:

• Why do you want to set up a foundation?
• What charities and causes are you focused on?
• How much time do you have to look after the foundation?
• How and when do you see your children getting involved?

As Susan and Jay answered these questions, they realized that while they want their charitable gifting to be more organized and focused, they were not ready for a private foundation. Susan and Jay were still dabbling in causes and enjoyed spreading their time and resources across many charities. They also knew they did not want to spend their precious time setting up or administering to a foundation - right now. Getting their daughter involved was important to them, but she busy with her own life. Participating with her parents in charitable acts and events was a tradition - but running a foundation could be a distraction right now.

Based on estimates from the family's accountant, we set aside assets equal to roughly 50% of adjusted gross income into an asset pool designated for community causes. We began to track Susan's and Jay's charitable giving. The family, with our help, set aside a day in which they visited an assortment of charities. They wrote down their family's beliefs and charitable focus (their mission) and agreed to get together quarterly. Each quarter, with their daughter, they began picking causes they cared about - choosing to volunteer time and/or money. We tracked their gifts and showed them the annual and cumulative effect they were having on causes like cancer, education and poverty. The reports quantified the difference the family was making and clarified its mission.

In the end, Susan and Jay were not ready to make an irreversible decision now that could last for generations. They weren't ready for the permanency of a donor advised fund or to deal with the administration of a private foundation. Instead, our approach was designed to allow them to try on the advice, experiment, be tax-efficient and enjoy their giving. In the end, they felt more organized, their daughter was involved, and it was fun, easy and impactful. Someday, they might want a foundation, but right now their pseudo-foundation meets their family's needs and supports their charitable goals. Sometimes, small solutions can have a big impact!

Kathryn and Michael have worked hard over the years and that hard work has produced a significant amount of wealth for them and their family. They have a son and a daughter, William and Sarah, both in their mid-20s. Both have graduated from college. One is in graduate school while the other one is working. Sarah is engaged and William is happily single. Secure in their own lifestyle, Kathryn and Michael set out to help their children. To support Sarah and William, they feel comfortable transferring $1MM to each (no more and no less). What is the best way to accomplish this transfer?

Kathryn and Michael have an estate plan in place that ultimately transfers $5MM to each child, but death is not their preferred approach to gift assets to their children. They want to help their children now. They want to help William and Sarah buy a home nearby, start a business and/or participate in family travel. They don't really care if each get's $1MM. Kathryn and Michael prioritize giving their children a head-start in life without adversely affecting their son's or daughter's work ethic and ability to be individually successful. While it is it is important to help their children, Kathryn and Michael don't ever want to be in a position where they can't support their lifestyle or need to ask for the money back.

We started with Kathryn and Michael's lifestyle. We ran several simulations and stressed tested assumptions to demonstrate worse case scenarios¹. We then began to quantify how much each of their children would need to buy a home, start a business and/or participate in family trips. The exercise made it easy for Kathryn and Michael to make an informed, confident decision to move $1.5MM to each child versus the $1MM they originally planned. To that end, we establish a gifting program that included annual gifts, a GRAT and a lifetime trust for each of their children. Kathryn and Michael began gifting $26,000 to each of their children's trust. To complement the annual gifts, Kathryn and Michael contribute growth-oriented assets to a Grantor Retained Annuity Trusts (GRAT). At the end of the GRAT term, all appreciation above the hurdle rate was passed to their son and daughter (gift and estate tax-free).

¹Results from scenarios are hypothetical and not meant to represent or guarantee any specific outcome. There is no guarantee that every possible scenario and/or condition is tested.

Family meetings provided the forum to discuss the purpose of the trusts and for SEI to educate both Sarah and William on the approach. SEI's focus on the goal and command over multiple financial disciplines helped Kathryn and Michael to keep their lifestyle on track and still support their children. Ultimately, the financial element of the technique is only small part of the story. Their son William said it best, "I am grateful for the money. I am more grateful for the lesson I've learned about the money and the entrepreneurial tradition in my family. I have my work cut out for me to continue the tradition."