Real Stories From the Past 30 Days: Saving Our Clients Hundreds of Thousands of Dollars


I wanted to do a piece on real client situations that I've provided solutions for in the past month and how they've added value to my client's lives. I'll break down three unique cases and how each client has benefited in a great way.


Story Number 1: A Quick Look at Fees - and Value


There were actually two cases in the past month where I've met a client paying north of 2% in annual fees. They were also getting zero contact from their "advisor" on the accounts and their overall planning.


In the first case, the client had a Traditional IRA that was inside of an annuity. The annual fees on the annuity were 2.05% annually. It also had riders that the client did not need. The kicker here is that the client had not heard from the sales agent in a long time, and was contributing more than the maximum amount ($6,000 for 2019 or $7,000 if over age 50). What some people may not know is that you ARE allowed to contribute more than the maximum limit, but you have to pay a 6% penalty for what is called an "ineligible contribution."


Not only was the client paying more than 2% of the account balance, but they were getting zero notifications from the company (where the account was held) regarding the ineligible contribution.


So what did we do? First, we put together a plan that detailed how much the client would have to save to meet their goals. Next, we were able to move money into accounts that still benefit from tax deferrals, but also made sure that the client was able to contribute the amount they wanted/needed to. And that was just the beginning. Cutting the fees in more than half, to provide a higher level of value is a win-win for everyone.


The second case was along the same lines and was from a friend that owns a fee-only firm like mine - Hethe client had an annuity charging him 3.95% annually. Yes, 3.95%. Some may think that it's not only the "advisor's" fault, but also the client's fault for not asking about fees. This is a reason I founded a fee-only firm and believe in straightforward fees - to not have anything to hide. I truly don't care about selling products. In fact, sometimes annuities are a great fit for clients (here is a recent interview about annuities I did for Credit Karma), but they shouldn't have to pay 3.95% for them. Also, you guessed it, the client hadn't heard from the sales agent since he bought the product.


This solution was very straightforward - provide real planning to client for a fee that's more transparent and 70% less than what they were paying. It's not rocket science. There are business models out there that allow people to get the advice and planning they need, without paying ridiculous fees for products they don't need.


All things considered, in these two cases, the clients are saving an estimated $200,000 in fees over the next 30 years.


Story Number 2: General Motors Employee Saves Big By Being Smart With 401(k) Strategy


I've done both a video and an info-graphic on Roth In-Plan Conversions - a new-ish idea that some 401(k) plans are now offering for aggressive savers (like GM, I believe Ford and Consumer's Energy have the option, while others, such as Nissan, do not). To keep it simple, I will not go into the intricacies of how this works as it's beyond the scope of this post, but it's a slam dunk for the people that can take advantage of the option. I have multiple clients implementing the strategy and the estimated tax savings are in the multiple six-figure range over the next 30 years.


As more companies implement the ability to use the strategy, it will become more well known and hopefully more widely used. Be sure to ask your HR department if it's offered to you!


Story Number 3: Saving a Younger Couple Money by NOT Selling a Product


This story is interesting - I had a prospective client reach out to me that was a soon-to-be-married young professional. Over the years, my client base has grown to folks on the cusp of retirement or in retirement, but early in my career, I worked with a lot of younger clients.


This prospective couple had a history of very disciplined savings, accumulating a six-figure portfolio before age 25. What they desired was advice and guidance; where to save, the benefits of saving in different accounts, house down payment advice, etc.


It brought me back to why I even started my firm and why being fee-only is important to me. These people flat out did not need products, they needed advice. However (believe-it-or-not), selling good advice is HARDER than selling products. Advice is intangible, so people have a hard time putting together a fair cost/benefit analysis. With products, they feel like they're still "getting something" for their money, even if it's not in their best interest. I knew this when I started the firm, but didn't care - to me, it's more important to do right for the clients than make money selling something they didn't need.


Did they become clients? Nope. Did I get paid for talking with them? Nope. Did I do the right thing? Always. They may not know it, but I certainly do - they just saved themselves a boatload of money because they didn't get pitched a product they didn't need.

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Lifepoint planning, doug oosterhart, certified financial planner near me, financial planner, fee only financial planner
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