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"We developed a retirement projection that allowed Jim and Marge to understand what they needed to save each year in order to retire comfortably."

Jim and Margie

Jim and Margie - Financial Planning & Investment Management Case Study

A physician planning for retirement and preparing to send three children to college.

Jim & Margie’s Background

Jim is married to Margie and has three children, Joe, 20, John, 17, and Bernadette, 12, and is a shareholder in a neurosurgical medical group. He enjoys practicing medicine, but changes in healthcare and insurance reimbursement have resulted in declining income and increased workload.

Joe is currently enrolled at Vanderbilt University and John is quickly approaching college as a junior at a local high school. Bernadette is a beautiful 12-year old, but with challenges of her own. She has some learning issues related to autism and is doing well at school, but Jim and Margie are unsure if college will be the right fit for her. They are also concerned that Bernadette might not be able to live completely independently as an adult and they that may need to provide some level of financial assistance throughout her lifetime.

Jim has accumulated about $1.5 million in assets. The accounts are mostly small and spread out among several different brokerages and mutual funds. He knows he is not managing the resources effectively, but hasn’t had time to figure out an investment strategy. He would like to retire when he is 65, but is unsure what he needs to be doing in order to be ready to retire. He also would like to buy a golf condo in Florida in the next 5 years and a boat for weekend trips with the family.

Margie’s main concern is protecting the family’s financial future should anything unexpected happen to Jim. She recently lost her father and has begun assuming more responsibility of her aging mother’s finances and healthcare. Margie wants to be sure they have the appropriate safety nets, including life insurance, disability insurance and long-term care insurance in place. She also wants to ensure their wills are up-to-date.

How did Foster & Motley Help?

Joe and Margie decided our Wealth Management services were the best fit to help them create financial plans, safety nets and arrange investments to help them achieve their goals. A financial planner worked with them to develop a comprehensive, personalized financial plan. Jim and Margie also began working with one of our portfolio managers to consolidate and manage their investment resources and accounts in way consistent to their goals.

Their complete financial and investment plan addressed and recommended the following:

  • A net worth analysis was developed to look at the family’s assets and liabilities. We recommended refinancing their home mortgage and connected them with a lender familiar with physicians’ financial situations.
  • A cash flow plan was created that restructured their fixed expenses in a way that allowed more flexibility in the event Jim’s income remains volatile and unpredictable. It even showed them how to fund the purchase of Jim’s dream boat next year and a golf condo in 5 years.
  • A college funding plan was developed for Joe, John and Bernadette. We identified cash flow and borrowing strategies to make funds available immediately for Joe and John’s college expenses. For Bernadette, we developed an education funding plan that was very flexible, should college not be right for her.
  • We developed a retirement projection that allowed Jim and Margie to understand what they needed to save each year in order to retire comfortably. Part of this involved developing a detailed plan regarding how Jim would recognize value from his share of the practice and checking the buy-sell agreements between the partners in the medical practice.
  • We helped them understand their insurance needs and identified the most appropriate coverage to help them meet those needs. Jim needed about $3 million more in life insurance to help protect his family. Most of this could be term insurance, but a portion should be permanent insurance in the event Bernadette needs longer term financial support. We referred them to an independent life insurance agent to put the new insurance policies in place. They also needed a modest amount of long-term care insurance. We referred them to an agent that specializes in long-term care insurance to put appropriate coverage in place.
  • We reviewed their estate plan and determined their current wills and choices for guardians for Bernadette were inconsistent with their current wishes. They also didn’t have a power of attorney that would allow Margie to manage their finances in the event Jim was disabled. We referred them to an attorney and worked with the attorney to make sure their assets were properly titled and the beneficiary designations on the life insurance policies and retirement plans were consistent with their estate plan.
  • In conjunction with one of our portfolio managers, an investment policy statement was crafted that will guide their investment strategy. We helped them consolidate their assets at a single custodian and began actively managing their assets. They meet with a portfolio manager every 6 months (or more often if they choose) to discuss changes in the portfolio. Quarterly, they receive a detailed investment report that measures the progress of their investment plan.

The Case Study is hypothetical in nature, for illustrative purposes only, and should not be considered investment advice. The information is intended to illustrate services available at Foster and Motley, Inc, and is not intended as a testimonial or endorsement of Foster & Motley, Inc. as an investment advisor. The Case Study does not necessarily represent the experiences of other clients, does not reflect actual investment results, nor is a guarantee of future results. The investment strategies discussed are not appropriate for every investor and take into consideration a client’s investment objectives and financial needs. Clients should review with their Foster & Motley, Inc. Financial Advisor the terms, conditions and risks involved with specific services and products.