Dr. and Mrs. Cherry - Highly-educated, long-term prudent investors who desire clarity in their retirement plan to continue to be faithful stewards.
(These hypothetical examples and other information presented regarding the likelihood of various conclusions, are hypothetical in nature, do not reflect actual clients or outcomes and are not guarantees of future results.)
Dr. and Mrs. Cherry have lived in Harrisonburg for over 35 years. They are savers and have invested diligently for as long as they can remember. They have built up well over $3,000,000 in their retirement plans and other investment accounts. The vehicles they drive are over 10 years old. The Cherrys give at least 15% of their income each year to their church and organizations they care about.
Retirement is right around the corner. Dr. and Mrs. Cherry know they would like to partner with an advisor they can trust to help them make the very best decisions with their money. However, they are also skeptical of investment advisors, because they feel like they have overpaid in the past for sub-par service.
As prudent and highly-educated investors, this wise couple knows the vast majority of “actively managed” funds underperform index funds. This causes them to question if it makes sense to pay a financial advisor to manage their money for them.
Several very important decisions lie ahead of them. This is what is running through their minds:
- When should Dr. Cherry retire?
- What should our strategy be for optimizing Social Security?
- How should we take the hospital pension? Lump sum? Life payout? What about survivor options?
- How should our retirement accounts funds be withdrawn in retirement?
- What is our optimal level of risk given our long life expectancies and the amount of money that we need to live on?
- How can we set up our estate properly so that everything passes smoothly when we are gone?
- How can we be more tax-efficient?
- What are we missing?
During the initial meeting, the Cherrys asked thoughtful questions to the team at LWM. The team gave them several good ideas and answered 100% of their questions clearly and concisely. After assessing the complexity of their planning, they were quoted a flat fee of $3,000 to create a custom, written financial plan.
Dr. and Mrs. Cherry decided to start with a one-time flat fee financial planning relationship with Larson Wealth Management. Before engaging in a long-term relationship, they felt more comfortable testing the waters to make sure they would receive the value from the relationship. It was a high priority for the Cherrys to know their advisors share similar values. They desired to partner with an advisor team for the next few decades and did not want to feel rushed into making this decision.
Over the course of the next several weeks, meetings were scheduled to gather additional information, analyze the information, and revise their plan. After each meeting, Dr. and Mrs. Cherry were given “homework” assignments and then reported back to the LWM team between meetings.
A few months later, the Cherrys were presented with a concise six-page document that outlines every major financial decision they should make now and in the next few years. It also included realistic projections and recommendations to help them move closer to their goals. The plan also included concrete recommendations and a checklist of next steps, so the Cherrys would know exactly what needs to be done next.
They soon discovered that the $3,000 fee they paid for the plan was easily saved through recommendations and strategies uncovered during the planning process. They also enjoyed working with the team and decided to engage in an ongoing relationship.
Shortly after the plan was delivered, Dr. and Mrs. Cherry transferred their investments to the team at Larson Wealth Management to be managed in the agreed-upon portfolio outlined in their plan. They also determined a meeting frequency to ensure their plan stays current and up-to-date. Now, they schedule each meeting three months in advance, occasionally changing it when life circumstances determine the need to do so. After each meeting, their written plan is updated and emailed to them.
The financial planning fees they pay to LWM are $6,000 annually, and the fee to manage their portfolio is 0.30% of their invested assets. All of these fees are deducted from their accounts quarterly. The financial planning fee was determined by the complexity of their planning and the investment management fee was determined by the LWM fee schedule.
The Cherrys feel like these fees are very reasonable and are also glad to know that their fees may go down as their accounts grow or as life gets less complex. When they compared their “all-in” fees with LWM to their prior advisor, they were pleasantly surprised. Those fees were actually slightly less with LWM at the helm because the previous advisor failed to reduce fees over the years as industry-wide fees were reduced. Dr. and Mrs. Cherry received incredible value at a lower fee.
The Cherrys were ecstatic they could receive both financial planning and investment help and tangibly recognized the benefits of a sound financial plan. The amount of confidence they had now in their financial future was priceless. The organizations they care about are now receiving even more giving. Beyond that, they are now in discussions about the best way to help their kids purchase their first homes. The complete clarity the Cherrys have regarding the fees they are paying assures them that they are being faithful stewards to everything that has been entrusted to them while here on this earth.