Sean and Linda were successful business owners with two young children. They had high incomes but not large investment or savings balances yet because they were reinvesting most of their income back into their business and their family. They were relatively new to investing and had tons of questions about their finances and really needed advice. They approached both of their parent’s advisors (both of whom worked for traditional “big bank” firms) but they quickly realized that they wouldn’t meet their minimums because they didn’t have enough assets to manage. They would be a small fish in a very large pond. They were frustrated and felt ignored. They needed access to quality advice so they could they make right decisions to grow their assets but they didn’t have enough assets to access the advice in the first place.
Here’s how we help
Many of the traditional ‘investment’ firms can’t or don’t want to serve these clients because it isn’t profitable for them to do so. Since their fee is typically a percentage of assets under their direct management, they need to have high asset minimums. We, on the other hand, love working with young couples or individuals who are just starting out on the journey to financial success, what we refer to as Emerging Wealth clients. Who better to work with than young, successful, disciplined savers…those will be our future biggest and best clients!
In fact, we have designed planning services specifically catered to Emerging Wealth individuals and families.
When we first started working with Sean and Linda, the first thing we had them do was to go through our Goals, Expectations and Concerns exercise. This was the first step in our initial planing process.
After they completed that exercise, we then had our Financial Road Map meeting with them to discuss the results of the exercise and do an initial “Financial Discovery” and “Family Discovery” so we could get a complete picture of their situation and what they were trying to achieve. From those discussions, we were able to create their initial Financial Goal Plan for their family. Essentially, we analyze their current assets and savings and show them what it would take to achieve their current goals. But, this is only the beginning.
The initial Financial Goal Plan helped establish a baseline for Sean and Linda. They now knew what it would take but didn’t know the steps of how to get there. They had a number of decisions to make and then needed to execute on those decisions. When their initial Financial Goal Plan was completed, we presented them with a list of ‘to dos’…
- Determine risk tolerance and establish asset allocation policy
- Establish a written investment and planning policy
- Establish and maintain an emergency reserve account
- Review family resources to determine goal funding approach
- Setup online service to organize all accounts
- Establish an investment savings plan according to your stated risk tolerance and goals
- Explore feasibility of company retirement plan:
- Annually fund to IRS maximum as cash flow allows
- Explore tax benefits/eligibility of Roth accounts and/or Roth conversions
- Explore college funding plan options (529 tuition credits, 529 investment accounts, taxable savings)
- Set up automatic savings plan into selected program
- Review company benefits and fill holes with private arrangements
- Review and update estate planning documents
- Review personal Risk Management program:
- Life Insurance
- Income Protection
- Asset Protection
Not surprisingly, they were a bit overwhelmed, which is completely understandable. In our experience, we know this is a common feeling. So, instead of creating a 200 page “financial plan” and saying, “here’s your plan, you should do everything in it”, we sat with Sean and Linda and created a customized game plan for how we were going to address all of these ‘to dos’ over the next year. We then help them with each step and make sure it gets done. We continually work to provide them the advice and coaching they need on their financial journey and hold them accountable along the way to be successful.