This client relationship dates back several years to when he was a dentist, a few years removed from dental school, working for another practice owner. The client was referred to us by the practice owner, who wanted to make sure his new-hire would be in a position to make appropriate financial decisions. About a year after this dentist became our client, he was in a position to buy the practice he was running and become a small business owner.
Working closely with our client’s accountant and attorney, we helped him understand all of the new financial responsibilities and opportunities he would now have. Once he decided to payoff the practice over a five-year term, his lender required that he obtain a $1 million dollar term life insurance policy to cover his debt if he were to predecease the payoff. Through our term-life platform we obtained six competing quotes and helped him secure the term life insurance that he needed.
Once the practice was transitioned into his name, he asked us what his options were for retirement savings now that he is a business owner. We helped him evaluate several different plan options before deciding on a Safe Harbor 401k and Profit Sharing Plan where he could save up to $49,000 per year on a pre-tax basis. On top of the retirement savings, we created a diversified portfolio in his personal account that he also contributes to on a monthly basis. The next idea we are evaluating is over-funding a variable universal life insurance policy (VUL) so he can take advantage of tax-deferred growth and tax-free distributions.
About a year after buying his first practice, our client decided he wanted to expand and open a second practice. To do so, he was going to require some capital for an office and for equipment. With the help of our lending department, we were able to help him secure a $200,000 loan.
This client has been very successful and his income is approaching seven figures as he has just opened his fourth practice. He has consistently relied on ACM Wealth Management for any type of financial decision that he needs to make. If we can’t help him, he is confident that we will refer him to someone who can. He has experienced just about every aspect of our wealth management capabilities; life insurance, retirement plans, portfolio design and management, and lending.
This person was a long time client and retired from his executive position in the late 1980’s. His accumulated wealth came from his compensation, inheritance and wise investing. In 1993 he put in place an extensive estate plan with the aid of his attorney. All he shared with us about the plan was that a major funding to complete the plan was due in 2003. As that date approached we suggested that it may be a good idea for him to set up a meeting with all his advisors (accountant, attorney and us) so that he could be confident that the element of the estate plan he was preparing to implement was still legal and tax friendly.
At the meeting several important facts were turned up. First, an element of the original plan done in 1993 was a Revocable Living Trust. What he did not understand, and the attorney did not follow through on, was that the trust needed to be funded. We explained to him how we could fund the trust with his investment account assets. Second, to complete the plan he needed $1.3 million in cash and at the current time he was short by $500,000. Instead of selling stock that would trigger a large capital gain (which his accountant was against) we suggested that he simply borrow the money from us and he could pay it back as bonds matured in his account and as dividends and interest were paid. The accountant agreed since his borrowing costs would be tax deductible and the cost would be less than the capital gain tax.
Having each of his advisors present and communicating with one another allowed the plan to be completed in one meeting instead of a multitude of phone calls and e-mails. We also gained an understanding of his entire estate plan and in the process uncovered the fact that his Revocable Trust had not been funded which was completed a few days later.
This particular client had been working with ACM Wealth Management for several years. On a few occasions the topic of his life insurance was discussed, but without much follow through. Finally, the client provided us with an in-force ledger for two life policies that he had. While evaluating these policies, we determined that this client needed more life insurance and was interested in exploring long-term care insurance as well.
Between the two whole life policies, the client had significant cash value and was still paying annual premiums. After determining and appropriate amount of life insurance, we were able to do a 1035 exchange of cash value into a new life policy and eliminate premiums on that policy, add the appropriate amount of term life insurance to supplement the new policy and add a long-term care policy for him and his wife. The real success is that we were able to do all of this and reduce his annual premiums!
This particular client had been inactive client for quite some time and had accumulated a $200,000 portfolio of various stocks and mutual funds. Most of these investments were “collected” over the years rather than part of an overall plan.
During the first few months of ACM Wealth Management’s formation, we decided that this was a client who needed to be re-profiled and educated on our wealth management capabilities. We accomplished this during the first meeting which led to a new level of trust and credibility. The client informed us of two other brokerage firms that he had accounts with and he also complained about the lack of service he was getting from at least one of them. From this point, he was ready to share all the details of his financial life so we could have a better understanding of his current situation and help him plan for a near term retirement.
The success of this story that many investors can comprehend is that he had three different relationships, but no one taking control. By gaining a better understanding of his retirement and income goals, we were able to develop a retirement plan so he knew exactly how much he should be able to pull from his investments once he stops working. Once he showed us his other investments and we were able to discover his risk tolerance, we were able to show him that he was not properly diversified and he had several stocks and mutual funds that had underperformed over the last several years. The next step was to show him the customized asset allocation strategy that we developed and how we could implement in a tax efficient manner.
The immediate result was a client who now has an understanding of what his retirement can be and the peace of mind that his portfolio is diversified and less volatile. Because of this plan, he consolidated his remaining $3.3 million with Tony and his team and we are now working with his attorney to update the estate plan to make sure he and his wife can distribute their assets based on their wishes.