John and Judy Green were a young couple in their early 40�s with two children to get through college, a goal of retiring while still young enough to enjoy it, and a hodgepodge of investments and old 401(k)s that they had accumulated over the years. They decided to look for a financial planner who could help them get on track. They wanted to know if they were saving enough for retirement and needed a plan for paying for the college costs looming in their future. They also needed some help with their investments. They knew they wanted the objective advice of a fee-only planner, so they set up interviews with the few they could find in their area. The planners they interviewed showed them examples of wonderful, detailed financial plans that would address all of their concerns, and even those they hadn�t thought of, such as ideas for lowering taxes. The problem was the fees for these plans started at $4,000. While the Greens felt sure a comprehensive plan would be an investment that would likely �pay for itself,� they just didn�t have the $4,000 available to pay for it. They returned home discouraged and not sure where to turn next.
This scenario is all too familiar. Here at BWFA we have been aware for some time that the needs of younger people are not well served by the fee-only community. While we have always had a policy here of trying to work with anyone that comes to our office and needs our help, we haven�t had a service specifically designed for this group, until now.
As a result of its relationship with the APL Federal Credit Union and the needs of APL�s members, BWFA created a new financial plan called the Pre-retirement Plan. This plan is designed for people who are more than five years from retirement, and who do not have complicating financial issues, such as stock options, the death of a spouse, complex estate and trust issues, or their own businesses. This plan provides a general assessment of a client�s situation and provides specific recommendations on how to secure and improve their financial future. The plan will tell people how much they need to be saving to meet their goals for retirement or college educations, and other goals, such as major home improvements or a vacation home. It will also provide recommendations about how to invest their money, ways to save taxes, and what should be included in their estate plan. Finally, the plan will review their life, disability and liability insurance to make sure the clients are properly covered. The plan is modular, so it can be tailored to the specific needs of a client in terms of price and content.
People in this age group have a significant need for financial advice and direction. However, they are also in the �highest consumption� stage of life with just about everything they are making going to raise their families and meet their daily living expenses. They often do not have the excess cash flow to afford good financial advice. At BWFA, we have created a financial plan that provides the elements most critical to this group: retirement savings, college funding, investments, and insurance. And we have kept costs low by providing bullet-pointed recommendations with only a few supporting graphs and spreadsheets.
This new service finally meets the needs of people like the Greens, providing objective, fee-only advice for pre-retirees at a price they can afford.