I. Financial Planning

The process of planning for current and future goals is both individual as well as evolving.  A “one-size-fits-all” approach cannot be applied. However, the starting point is the same: a thorough analysis of your current financial situation, a determination of your short and long term needs and goals, and comprehensive advice on how to achieve them, given your current asset ownership and your potential for earnings in the future. 

One of the challenges of financial planning is that both needs and goals evolve throughout the various stages of a Client’s life.

Goal Based Financial Planning encourages the Client to set milestones while working with their advisor to reach them. I believe it is important to identify enjoyable goals to pursue in our retirement.  It becomes a more gratifying process rather than simply “saving for retirement.”

A strong financial plan becomes the road map to financial independence.

Your financial objectives might include:

  • Saving for a new or larger home
  • Saving for education
  • Protecting your loved ones from financial risk
  • Reducing current and future taxes
  • Caring for a special-needs child
  • Caring for an elderly parent
  • Saving for financial independence
  • Saving for a business venture
  • Preparing for a change in marital status
  • Creating a paycheck for retirement
  • Creating personal wealth
  • Maximizing the transfer of assets to beneficiaries
  • Establishing charitable legacies

My goal is to provide you with a full spectrum of strategies to build a financial plan that will evolve to meet your family’s financial needs and goals.

Fees for Financial Plans or limited engagements

I offer two options for my services:

  • Fee-only financial and retirement planning at the rate of $175/hour or,
  • Financial Planning as part of an investment advisory relationship in which the cost is a percentage of the value of assets under management.

In the Fee only financial plan, a comprehensive plan and the finished written report may take 18 to 25 hours to complete.  Fees are based on the time required to review all of the information you provide: analyzing your current financial status, researching optimal strategies and solutions for your individual case and presenting recommendations to assist you in reaching your financial and life goals in a tax efficient manner. 

Some clients elect to implement my recommendations on their own and will ask for pointed advise or a review of their financial plan when needs arise. These services are subject to an hourly rate.

Some clients will also seek my advise for short term engagements such as a) portfolio reviews or the review of investments in employer retirement plans to make sure they are growing adequately to meet retirement needs and goals, b) assistance to persons facing divorce negotiations who need help evaluating assets available to be divided, c) review and evaluation of existing life insurance or long term care policies and comparison with new products that have become available that may be more advantageous or d) review of annuity elections offered by employers due to upcoming retirement or downsizing.

Most clients elect to work with me on an ongoing basis by entering into an Investment Advisory Relationship that includes investment advice and goal monitoring for their entire financial picture.  I am available to my clients to discuss a wide range of financial goals and concerns, beyond those related to the portfolios they have entrusted to my care.  This consultative approach provides me with a deeper understanding of my clients’ needs and goals which in turn result in better outcomes for their financial plans.  The result is that my clients’ financial plan reviews may be conducted on an annual basis as well as on an “if needed” basis.  I encourage clients to get in touch any time their circumstances or goals change.

My rates for Financial Planning with investment advice are based on Assets Under Management. The annual fee is 1% for portfolios under $ 1 million, .85% for portfolios of $1 million to under $3 million, .75% for portfolios of $3 million to $5 million and .6% for portfolios above $5 million dollars.

II. Investment Management

The basis of my Client business is primarily a hybrid of Goal Based Financial Planning and Investment Advisory or Assets Under Management.  While most clients choose to work with me to assist them in growing their portfolios, my comprehensive approach also includes financial planning.

Once your financial goals and investment risk tolerances are identified and my review of your existing portfolio has been completed, I make recommendations for the best financial strategies for accomplishing goals.  I will use my extensive investing experience working with stocks, bonds, options, and funds, plus my 17 years on Wall Street, and my rigorous education at the University of Chicago’s Booth Graduate School of Business, to make my recommendations. Furthermore, I do not recommend any investment that I do not deem worthwhile for myself or my family’s portfolio!

As an Independent Financial Advisor, and through my affiliation with Nationwide Planning Associates, I can offer a broad and diverse product lineup to work towards your financial goals without any conflicts of interest.  This allows me to select the products that will best serve my Clients without the restrictions inherent in affiliations with a single financial institution.  As part of my financial planning process, I will analyze and become comfortable with the details of your financial picture to build a portfolio designed to help you achieve your financial goals.

Investment products may include individual stocks, mutual funds, exchange traded funds, closed end funds, corporate bonds, municipal bonds, government bonds, preferred securities or covered options.  I prefer to invest in liquid investments that have a daily market value and allow Clients to access their savings quickly, if necessary.

As part of the financial review, the need for insurance coverage and guaranteed sources of income will be assessed.  Insurance products that may be discussed are life, disability, long term care, and annuities.   I prefer products that offer solutions for a family’s insurance needs and provide flexibility to access the funds if the coverage is no longer needed.  For example, life insurance can be a valuable financial product to protect a person’s dependents when they are young.  As life continues and children grow, the need for life insurance diminishes, but the need to cover the expenses of elderly care, or other health issues becomes more important.  Selecting a life insurance policy at an early age, that will also provide benefits for the insured at a later age is a perfect example of products that offer flexibility by covering several financial needs over a lifetime.

Fees for Investment Management

My rates for financial planning with investment advice are based on the quantity of assets under management. The annual fee is 1.0% for portfolios under $ 1 million, 0.85% for portfolios of $1 million to under $3 million, 0.75% for portfolios of $3 million to $5 million, and 0.6% for portfolios above $5 million dollars.   

See Retirement Income Planning with Insurance and Long-Term Care Coverage for a discussion of insurance costs.  

III. Retirement Income Planning

Saving for retirement is what we must do concurrently, while pursuing all other goals in life. I like to describe Retirement Income Planning as the process of creating a paycheck for ourselves to be available when we cease working. I believe it is important to identify enjoyable goals to pursue in our retirement.   Goal based financial planning helps visualize how your future will look, so you can work towards it. This is also helpful in anticipating how much we will need to save today, to secure the retirement we want tomorrow.

Retirement income planning encompasses planning for some decisions that are currently “unknown” or “to be determined”.  As a Certified Retirement Income Planner, I help clients prepare financially for the decisions that they will eventually need to make.  Some of the questions related to these decisions are clear and expected, others are less obvious:

  1. What to do in retirement? Should part-time work be considered?
  2. When is the best time to retire?
  3. Where will you live? Will you make one or many moves?  Examples are: a move to a more hospitable climate early in retirement, a move closer to children and other family, or a move later in retirement to address care needs.
  4. How much income is needed to cover a desired lifestyle?
  5. When to claim Social Security benefits, to maximize benefits over your lifetime and that of your spouse?
  6. How and when to take pension distributions?  Should a pension benefit be taken in one payment or over many years? Deferring retirement benefits usually result in larger benefits!
  7. How to turn investments and other assets into income?
  8. How and when to sell the stock options granted by my employer so long ago?
  9. How to access the wealth accumulated in a home?
  10. When should I sell my business? Should I leave it to my family?
  11. What is the best way to cover health care expenses?
  12. When to plan for help?
  13. How long will a person live and how long should the resources last?

The seven obligations of a Financial Planner are the starting point to retirement income planning.  They are:

• Understand the Client’s personal and financial Circumstances; • Identify and select Goals; • Analyze the current course of action and potential recommendations; • Develop financial planning recommendations; • Present financial planning recommendations; • Implement recommendations; and • Monitor progress on an ongoing basis.

In addition, retirement income planning focuses on the spending of assets accumulated over a lifetime, and doing so in a tax efficient manner, while using strategies to ensure funds are available to the end of a person’s plan.  Income security is a key piece of a retirement plan.

Preparation for spending in retirement includes methods to prolong portfolio life, increase wealth, and strategies to distribute and spend the portfolio in a sustainable manner.

IV. Retirement Income Planning with Long-Term Care Coverage

Retirement Income Planning Includes Planning for Long-Term Care Coverage

Retirement Income Planning includes more than investing your savings for growth so they can be converted into a paycheck to cover your expenses.  A thorough look at each type of expense over time and how it will be covered is another component of a financial plan. Let us look at planning for Long-Term Care Coverage.

First, what is “Long-Term Care?”

Somehow, long-term care is something we avoid talking about, even in the context of financial planning for retirement. And talk about it we must, as this conversation involves your future security!  According to the US Department of Health and Human Services (HHS) 70% of persons over 65 will need some form of long-term care coverage to help in case of a Nursing Home stay, or a period of prolonged recovery in your home, as this will provide you with a comfortable level of future assistance.

HHS defines long-term care as “a range of services and supports you may need to meet your personal care needs”.  Most long-term care is not medical care, but rather assistance with the basic personal tasks of everyday life, sometimes called Activities of Daily Living (ADLs), such as bathing, dressing, or eating. Other common long-term care services and supports are assistance with everyday tasks, sometimes called Instrumental Activities of Daily Living (IADLs) including, housework, managing money, shopping for groceries or clothes, using the telephone or other communication devices, caring for pets, etc. 

Who Pays for Long Term Care? 

People often assume that Medicare or Medigap, or even regular health insurance will absorb the cost of elderly care expenses, and unfortunately, that is not the case!  Long-term care is paid first with an individual’s own assets.  Medicare will only provide resources for elderly care, at the point when all other financial resources are exhausted.  Moreover, Medicare as a plan for long-term care would only be for those who otherwise do not have any wealth assets, since as I mentioned your personal funds are used first.

Planning for Long-Term Care

So, ensuring that there are resources available to pay for the various costs of elderly care, is a crucial component of financial planning for retirement.  Perhaps one of the difficulties in addressing long-term care is that the level and duration of care needed is unpredictable and thus difficult to plan.  When will we need care?  For how long will we need it?  What level of care/help will we need?  These are all difficult if not impossible to know, except for the fact that 70% of us will need elderly care help at some point after the age of 65.

This highlights WHY we need to plan for long-term care, so that when it is needed, the resources will be there, and your needs will be covered.  This is best done as part of standard retirement planning. Fortunately, there are many financial strategies and products available to provide coverage for this potentially very expensive need.  Including a LTC solution that fits within your financial plan, will help to ensure your financial security and will give peace of mind to you and your loved ones.

Long Term Care Insurance Products

There is a variety of long-term care insurance products each with a specific purpose and value proposition. They provide the financial resources necessary to pay for long-term care expenses not covered by medical insurance. Since elderly care expenses can add up to substantial amounts over time, having a policy to cover at least a portion of these expenses, allows you to preserve your life’s savings for other purposes including any legacy wishes.  Also, an important consideration for many is the general tax-deductibility of long-term care insurance premiums within the limits of the IRS rules.  A key feature of several new LTC policies is a “return of premium”.  This feature enables policy owners and beneficiaries to recoup funds spent on the policy and not used by the insured.

Most would consider long-term care insurance to be expensive however, early planning can greatly reduce its costs. Since 70% of US residents will need some form of elderly care, planning for this expense at an early age can greatly reduce the cost of coverage.  It is crucial to bear in mind that by sharing the cost of long term care expenses with an insurance company that offers the “return of premium” feature, one can substantially reduce the ultimate cost of elderly care.  This is because of the effect of the “insurance multiplier”. The insurance premium paid will most likely be a small portion of what the insurance company will eventually pay to cover elderly care expenses.  Elderly care expenses for a home bound person average $60,000 per annum.  Much elderly care is provided by loved ones who must stop working to provide care.  The right policy will pay a relative or a professional for providing this care.

Originally, 20 to 30 years ago, long-term care insurance products were of the “use it or lose it” variety – premiums were paid over many years and if death occurred prior to collecting any benefits the insurance had no remaining value. Today however, long-term care insurance products are structured very differently such that significant value remains in the event the insurance is not needed for long-term care expenses.  This might be a simple return of premium for the insured, a death benefit for heirs, or it could be an income annuity available to be collected at a certain point of time in the policy’s life. The new policies offer greater flexibility and benefits. The goal is to ensure funds will be available for your use and if not needed, they will be returned to your family.

Selecting the Right Strategy for Long-Term Care Coverage

The process begins with a review of your family history to determine longevity, potential future ailments and a projection of both medical expenses and potential long-term care expenses.  Persons who have experienced the cost of caring for an elderly loved one, understand the importance of considering this probable expense in a financial plan. Most persons are surprised by the high projected costs of elderly care.  The next step is to determine what type of care you may need and where you would like to be cared for.  Finally, the question of how much care can you afford becomes the key driver in the analysis. As a Certified Retirement Income Planner, I can help you through the process of assessing probable elderly care needs and identifying sources of funding for that expense.  In my experience, self-insuring is possible but unrealistic.  Insuring for a portion of elderly care expenses is wise.  Based on your personal assessment I can help you review the various types of policies and features that are suitable for your desired coverage, the type of benefits that would be best for your family and how this will fit in your overall financial plan.

I have a preference for products that offer solutions for a family’s insurance needs, and also provide flexibility to access the funds if the coverage is no longer needed.  For example, life insurance can be a valuable financial product to protect a person’s dependents when they are young.  As life continues and children grow, the need for life insurance diminishes, but the need to cover the expenses of elderly care, or other health issues becomes more important.  Selecting a life insurance policy at an early age, that will also provide benefits for the insured at a later age is a perfect example of products that offer flexibility by covering several financial needs over time.

Another example of flexibility in a policy is life insurance with an LTC rider.  These types of insurance policies allow the insured to “borrow funds” (get an advance) from the death benefit and use them to pay for elderly care expenses.  The “borrowed” funds are usually tax free.  The net effect is that the policy owner benefits from his/her own life policy and whatever is not used goes to his heirs.

How expensive are these policies? The cost of a policy is a function of the age of the insured, the benefits offered by the policy, how long benefits will be paid out, and if the benefits will grow over time.  Another factor in the cost of life and long-term care insurance is the health of the person seeking coverage.  Persons that are very healthy may be surprised to learn that they qualify for life insurance but are not able to get long term care benefits due to early onset of nagging conditions, such as arthritis.   Considering this coverage early is wise.

In addition to looking for policies that can benefit more than one family member, I am partial to policies that offer a “return of premium” feature. This allows families to recover the funds paid for a policy after the policy has been in place for a certain number of years.  I also believe that a policy does not need to cover all the projected elderly care expenses.  Insurance can be used for a portion of the expenses for example one to three years of projected LTC expenses.  Having the policy will provide some peace of mind that coverage is available and will allow for a more enjoyable retirement.

Finally, just as you plan for retirement income for other purposes such as housing, travel, or a legacy gift for your loved ones, your elderly care needs must be included in your retirement income planning. It is a potentially large expense that someone will have to pay because it is not covered by Medicare or health insurance. If you do not prepare for it, your children may be burdened with it.  Is this the legacy you would like to leave for your loved ones?

Finally, just as you plan for retirement income for other purposes such as housing, travel, or grandchildren, your long-term care coverage needs should be assessed within the context of your retirement income planning in general.