Client Situation: Dr. Smith and spouse, Abby, finally feel like their life has settled down a bit. After Dr. Smith completed his residency, he had his first full-time employment with a physicians group. After relocating, Abby was able to find a great job with a marketing agency to leverage her background and skills. They have purchased a home, and their two kids (8 & 6) are in school and thriving.
Investable Assets: Since Dr. Smith completed a specialty, his residency was longer than other physicians. At 35 years old, both Dr. Smith and Abby feel like they are behind when it comes to retirement savings. They were able to save some during residency in a 401(k) ($75k) and just started making Roth IRA contributions ($11k), but not as much as they feel they will need. Now that cash flow is much better, they want to make sure they are maximizing all available avenues.
Beacon Pointe Value Add:
We understand that every client has their own unique financial circumstances. Our success in the case was predicated on:
- Education: Smith is a participant in a Retirement Plan Group (401(k)) that Beacon Pointe is the Financial Advisor for. Through the employee education, Dr. Smith felt comfortable with the investment direction and financial education provided through the group.
- Financial Planning: Beacon Pointe scheduled a meeting with Dr. Smith and Abby to prioritize their financial goals and objectives.
- Roth Conversions: After doing some reading online, Dr. Smith thought he struck gold when he discovered the Roth IRA. Given his residency salary, he and Abby were able to make contributions; however, once he started with his new medical group and salary, they were devastated to find out from their CPA that they can no longer make Roth IRA contributions. Working with their Beacon Pointe advisor, they were able to discover the “contribute and convert” strategy that made it possible to make Roth IRA contributions. Since all of their non-Roth dollars were in 401(k)s, and their income was over the limit of deducting a traditional IRA contribution, they were able to make non-deductible IRA contributions, then convert to a Roth IRA to continue their Roth contribution strategy.
- Getting Financially Organized with Beacon Pointe’s Online Financial Planning Dashboard: Budgeting, Net Worth Tracking
- Retirement Funding and Planning
- Maximize Pre-Tax Retirement Savings to minimize taxes utilizing: 401(k)s, a Profit Sharing Plan through Dr. Smith Physician Group, establish a Solo(k) for Dr. Smith consulting for additional contributions
- Maximize Roth Contributions to build a tax-free retirement bucket
- Education Funding and Planning: Smith graduated with over $100k in student loan debt. They were able to pay it off very quickly with a signing bonus and “living like a resident” right after his job started. Their goal is to make sure their children do not have to go through that same process, so college savings became a priority right after retirement funding and part of their long-term financial plan.
Beacon Pointe was able to help calculate their contributions towards each goal, and keep their investments on track, continually monitoring Dr. Smith and Abby’s progress, making any modifications as life events and circumstances changed.
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Important Disclaimer: Case studies presented are hypothetical scenarios and intended for illustrative purposes only. They do not represent an actual client or an actual client’s experience, but rather are meant to provide an example of the Beacon Pointe’s process and methodology. An individual’s experience may vary based on his or her circumstances. There can be no assurance that the Firm will be able to achieve similar results in comparable situations. No portion of this case study is to be interpreted as a testimonial or endorsement of the Firm’s investment advisory services, and it is not known whether the hypothetical clients referenced approve of the Firm or its services. The information contained herein should not be construed as personal investment advice.
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