CUTHBERT (BERT) & PENELOPE (PENNY) 

AGE:
58 & 54 

CHILDREN:

GRACE (22) & BEN (18) 

GOAL: 

Transition from big pharma to pursue other interests without sacrificing their goals and quality of life. 

CHALLENGE: 

Bert and Penny don’t want to completely retire but they’ve both reached a point where they want more independence and control over their time to enjoy the beach, to enjoy being together and to pursue other interests such as coaching and counseling.   

Bert and Penny are both highly educated life science professionals with 20+ years of experience in large pharma, e.g. GSK, Pfizer, Wyeth, Merck, etc. and have amassed a healthy nest egg. 

The challenge has never been saving. They wisely started early and took advantage of the lucrative benefits big pharma offered and continue to do all the right things: 

• Generating six-figure incomes 
• Maxing out retirement and health savings accounts 
• Heavily funding college and other investment accounts 
• Growing sizeable equity in their primary home 
• Protecting themselves with the right types of insurance 

The challenge for Bert and Penny is transitioning from accumulating to spending.  They want to know how to draw money from their accounts, to replace the paychecks they’ve received their entire careers, so they can fund their goals, sustain their lifestyle and not get killed with taxes.    

They admit…they don’t know what they don’t know. 

As they approach this next stage of life, they want an expert, experienced in working with their complex corporate benefit plans and taxes, who can help them make strategic decisions with their money and simplify what actions need to be taken.  

ACTION: 

After interviewing several advisors from big banks and brokerages, whom they felt were very product oriented, Bert and Penny hired a fiduciary, fee-only CERTIFIED FINANCIAL PLANNER™ professional who they knew would not be tempted by high commission products.  This was an important first step because they’re very busy with competing demands from work, kids and their aging parents and don’t want to get bogged down in details nor second guess if the advice received is in their best interest. 

They worked with the advisor to organize their data and populate a personal dashboard which allowed them to more effectively manage both sides of their balance sheet (assets & liabilities) and to visualize their current and future cash flow.  This allowed them to see where the money was coming from to fund their goals and what the projected taxes would be.  

Some other features of planning included: 

• A tax-efficient distribution and investment strategy to fund their goals and improve after-tax returns. 
• An improved asset allocation that better aligned with their goals, reduced costs and improved risk adjusted returns. 
• Insurance review to determine the adequate amount of life and property coverage. 
• Estate plan review to ensure documents and beneficiary designations were consistent with the clients’ goals 
• A college funding analysis and strategy to maximize the utility of their college savings. 
• Tax planning to reduce current and future tax liabilities. 

RESULT: 

Bert and Penny already had all the pieces to the puzzle; they just needed some help developing the picture on the box and putting the pieces together.   

In the first month, their advisor helped Bert and Penny organize their finances and prioritize their goals. They were able to confirm a transition from big pharma was feasible and then developed and assigned actions that would move them even closer toward their goals. By the end of the first year, they had updated the amount and location of their systematic investing, re-allocated their existing assets to maximize risk-adjusted return, and brought their investments in line with their plan assumptions, among other things.   

Through the planning process, they no longer had to guess what type of school they could afford for Ben, there was no more guessing to what degree they could pull back from work and still maintain their lifestyle, and there was no more guessing if things will be okay in the event of a tragedy.  

Having alleviated some of their financial stress and uncertainty through the financial planning process, Bert and Penny have a newfound energy and outlook on this next chapter of their life. 

— 

Note: The above case study is hypothetical and does not involve an actual Open Wealth Network client. No portion of the content should be construed by a client or prospective client as a guarantee that he/she will experience the same or certain level of results or satisfaction if Open Wealth Network is engaged to provide investment advisory services.