By Sandy Keir, CFP®, Suncoast Advisory Group
I first met my client, Susan, in 2009, when she and her husband Bill attended one of my retirement planning seminars. Susan was 65 at the time and Bill was 70. This was the second marriage for both, they each had adult children living in various parts of the country and they jointly owned and worked in their family counselling practice.
Sue and Bill liked what they heard at my seminar, told me that they had a variety of investments in many different places, weren’t working with a financial advisor and were uncomfortable with their overall financial situation. We chatted briefly and they decided they wanted to sit down with me to share some of their concerns and see whether our personalities “meshed”.
Prior to Sue and Bill coming to my office, I asked them to complete two online assessments to determine their Behavior DNA and Financial DNA. The results of these assessments would give all three of us an understanding of their natural behavior, which is very important to the financial planning process because it drives an investor’s natural response to life and financial events. Since successful wealth creation depends on how people manage their emotional response to market changes, it was very important for them-and me-to understand their strengths and struggles when making investment decisions.
Once Sue and Bill came into the office, I told them how important my client discovery process is. I follow a purpose-based financial life planning process, where I spend a great deal of time getting to know my clients to find out what their goals, values and vision of the future are, before I even start discussing their investments. Through a series of exercises and discussions over a period of time, I get to know them very well and understand what they want out of life. I believe it’s very important for my clients to have their values and priorities shape their financial plan.
We spent the remainder of our “get acquainted” meeting discussing the facets of their lives they were satisfied with and those they weren’t and I told them that there were several things I was confident I could help them with. Together, we agreed that I should put together a proposal for them and meet again two weeks later.
At our next meeting, they agreed to have me develop a comprehensive financial plan and manage their investments. We discussed the life transitions they were currently experiencing or expected to experience in the future, such as when they should retire or sell their practice, whether they should relocate to be closer to their grandchildren, and how they should plan for Bill’s failing health and his possible need for care.
Sue and Bill brought me their financial statements, insurance policies and tax returns and I asked them some additional questions so I could get started on their financial plan. Over the past six years, I have systematically dealt with many of their financial issues. Sadly, in 2011 Bill died after a short illness. I was there to help Sue through the grieving process and, when she was ready, through the process of distributing Bill’s assets according to his wishes.
Here are some of the issues the three of us have addressed over the last few years:
1) Our top priority was to apply for a long-term-care insurance policy for Sue. Because Bill was older and in poor health, there was a high probability that Sue would have no one nearby to care for her when she needed help. Her policy will give her up to $6,000 a month for care in her own home, assisted living facility and, if needed, a nursing home. Both Bill and Sue were very relieved to have the policy in force. Unfortunately, Bill did not have a LTC policy and it was impossible to get him one because of his health issues and age. I designated other money to pay for his care.
2) I reviewed both Bill and Sue’s life insurance policies to make sure they were in force and “healthy”. Many people aren’t aware that insurance policies can lapse, even if they’re paying their premiums on time. It’s always advisable to have your advisor get an inforce illustration every couple of years to make sure the death benefit will be there when you need it most. We weren’t able to improve Bill’s policy because of his poor health, but Sue had $50,000 cash value in her policy and we were able to triple her death benefit from $100,000 to $300,000 without increasing her monthly premium.
3) We transferred in their brokerage accounts and consolidated all of their assets in one place. I did the due diligence on several money managers and hired some strategists to manage their money. Their account is being managed by a strategic manager (who employs a buy and hold strategy) and several tactical managers (who make changes in the portfolio when needed to respond to various market changes) and we review it quarterly to make sure its growing at a steady pace.
4) Since Sue had just reached full retirement age and hadn’t yet applied for Social Security benefits, we ran a Social Security Timing ~ report. The report showed us several different claiming strategies and we determined that Bill and Sue would receive more lifetime benefits if Sue applied for only her spousal benefit off of Bill’s earnings record initially and let her own benefit grow 8% a year until the age of 70. Then, she would switch to her own, now larger benefit. There are many strategies available and it’s always good to review the options before making a decision, because your decision is irreversible.
5) Sue continues to work and is now managing the family counselling practice. She plans to work as long as possible and then gradually reduce her hours over time. Sue inherited $200,000 from Bill and I split the money in half and invested $100,000 in two different annuities with lifetime income riders. As Sue’s income from work starts to drop, we’ll be able to trigger the income from one and then the second annuity as she needs the income. They’ll supplement her Social Security benefits and income from her investment portfolio. That will provide her with a growing source of income for the rest of her life.
This is a good example of how I work with my clients. Sue and I have a wonderful, strong relationship and I love to get together with her over lunch every three months to catch up on what’s changed in her life. We share a common life perspective and spend a lot of time talking about world issues and sharing stories about what our children are doing. I thoroughly enjoy my relationship with Sue and she never forgets to thank me for giving her a sense of financial security and peace of mind about the future.
If you can relate to any of the issues Sandy writes about in this month’s article, call her at 941-201-1231 or email her at firstname.lastname@example.org to receive complimentary information.
Sandra “Sandy” Keir, CFP®, CRPC, CLTC
Sandy’s “aha” moment came at an early age. She had a wonderful childhood in Duluth, Minnesota. Her father was a good provider. Her mother was a devoted wife and mother. But when it came to the household finances, her father was the decision-maker. Sandy made the connection that the breadwinner was the boss. Money was power. “I decided that I always wanted to be in control of my own destiny,” she says.
A lifelong wealth advisor, Sandy’s passion is to help other women pursue the financial independence she has gained. “As women, many of us are going to be on our own at some time in our lives,” Sandy says, “so we either need to gain an understanding of money and finances or we need to partner up with a financial advisor who can guide us. Many of the decisions we make, such as when to start taking Social Security, are irrevocable. However, only about 30 percent of women currently seek advice before making those decisions.”
During her 25 years in the wealth management industry, Sandy has worked for such companies as Merrill Lynch, Lincoln Financial Group and Transamerica Capital. She lived in Sarasota for 15 years before moving to Pennsylvania in 2009, to become the Regional Sales Manager of Western Pennsylvania for Kades-Margolis Corp. She returned to Sarasota in 2014 to join Suncoast Advisory Group.
In addition to being a Certified Financial Planner, of which only 23 percent are women, she holds the Chartered Retirement Planning Counselor (CRPC) and Certified in Long-Term Care (CLTC) designations. She earned her bachelor’s degree in Political Science from the University of Minnesota in Minneapolis.