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"Matt and Liz like having a dedicated financial planner and portfolio manager to integrate all components of their financial lives."

Matt

Matt - Financial Planning & Investment Management Case Study

He has been offered an early retirement package. Should he accept it?

Matt's Background

Matt and Liz met with Foster & Motley to discuss our service offerings. They concluded that the best option for them would be a limited-scope financial planning engagement, for which we charged a flat fee.

How did Foster & Motley Help?

We began the engagement by listening; listening to their initial reaction to the package, their unique goals, and what must happen during our engagement for them to feel it was worth their time and money.

Once we understood Matt & Liz better, we got to work. Working on a 45-day timeline meant we had a lot of work to do in a relatively short period of time. We summarized our understanding of their goals on a one-page planning summary that we routinely referred to during the planning process. Next, we presented a net worth statement and 5-year cash and tax projection to make sure we captured all assets and sources of income.

Using our sophisticated retirement modeling software, we then evaluated how their pending decision would affect their long-term financial outlook. The projections helped us understand the likelihood of their assets lasting throughout their lifetimes if:

  • Matt accepts the package and fully retires
  • Matt accepts the package and reemploys
  • Matt denies the package

Throughout the retirement analysis, we discussed important assumptions used in our retirement model and showed the sensitivity to key assumptions.

We helped Matt and Liz answer questions such as:

  • What if my stock options grow less than projected?
  • What if my portfolio grows less than projected?

We completed the initial plan by outlining different distribution options from the PST and Savings Plan. We educated Matt & Liz about the pros and cons of each option and made a recommendation based on everything we knew about them.

Our initial flat-fee planning process covered several months and provided Matt & Liz with the confidence to accept the separation package. Of course, there were plenty of important financial decisions ahead. We discussed different ways that we could work together, and ultimately, Matt and Liz selected our Wealth Management service.

We helped identify areas of OPPORTUNITY & created INTEGRATED solutions, including:

  • We took advantage of widely fluctuating tax brackets. The year following retirement was a low-income tax year. This presented a great opportunity to do a Lump Sum distribution from the P&G Profit Sharing Trust.
  • This distribution allowed them to:
    • Generate capital gain sourced cash flow
    • Donate low basis stock to charity rather than after-tax cash
    • Diversify their investment portfolio with the funds that rolled to an IRA
    • Their investment portfolio was heavily weighted to stocks. We recommended and implemented an asset allocation strategy to reduce the risk they were taking while meeting their cash flow needs. We modified their asset location to keep more of their after-tax income in their pocket.
    • They set limit orders on their P&G stock options to add discipline to their option strategy. They understood the trade-offs between carrying options vs. exercising early and investing in a diversified portfolio.

Matt and Liz like having a dedicated financial planner and portfolio manager to integrate all components of their financial lives. They value Foster & Motley’s fee-only advice, knowing that it is unbiased and focused on their best interest.

Most importantly, Matt and Liz are out enjoying the retirement they always envisioned.

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.