All-In Service · All-In Fee
Transparent · Comprehensive · Fiduciary
How We Compare
Case Study: Sue & Bob
Case Study: Sue & Bob
(Note: These case studies are hypothetical, do not involve a LaxFP client, and should not be construed as a guarantee.)
Situation
Age: Early sixties
Work: Nearing Retirement
Assets: $1,000,000
Financial Representative
Firm: Southeastern Mutual
(Insurance-Based Financial Services Company)
Professional: John Smith, CLU®, RICP®
Expertise: CLU®: Chartered Life Underwriter™ (Life Insurance Expert) | RICP®: Retirement Income Certified Professional™ (Annuity and Fixed Income Expert)
Products & Services Purchased
Using simple software, Bob & Sue are educated on their financial picture. They are given a 80-page binder as their financial plan that includes insurance-based solutions such as whole life insurance, long-term care and annuities.
John Smith recommends permanent life insurance so they can rest easy knowing that one will be taken care of if something happens to the other.
John Smith recommends a long-term care policy on both. A policy for both is too expensive, so they settle on just one for Bob since his grandma spent one year in a nursing home.
Fee is “0%”, but it locks the money up for seven years and has historically yielded ~2.5%
All-In Annuity Fees are 2.9% (1.35% M&E, 0.8% Rider, 0.75% Mutual Fund Expense Ratio). Their money will also be locked-in for seven years.
All-In Investment Fees are 1.75% (Advisory: 1%, Platform: 0.3%, Expense Ratios: 0.45%). The portfolio is a 60/40 portfolio based on their age that has historically generated 7% average annual returns. In five years it will revert to a 50/50 portfolio based on their age, generating 6.5% returns. Future returns are uncertain.
Other Services Purchased
Because Southeastern Mutual does not provide all essential services, Bob & Sue needed to go elsewhere to get these.
They seek out an attorney to provide the basic estate documents. Future amendments will cost $250 each. They must coordinate with their financial professional to align the beneficiaries with their estate plan.
They employ a CPA to prepare their tax returns each year for $350. Each year Sue and Bob must try and triangulate their CPA and their Financial Professional to ensure everyone is on the same page.
Financial Professional Compensation
A flat fee to pay the professional to explore all areas of finance.
$12,000 in annual premium at a 70% commission rate.
$4,200 in annual premium at a 50% commission rate.
$200,000 at a 6% commission rate.
$300,000 at a 7% commission rate.
$500,000 at a 1% advisory fee.
Results:
Plan: $2,000 | Premiums: $16,200 | Annuity: $8,700 | Managed: $8,750 | Tax Prep: $350.
Plus $2,000 for the Will. A trust would have been $8,000 with the attorney.
The conservative investment strategy can generate a 4% safe withdrawal rate on $1,000,000: $40,000. Subtracting the $16,000 in premiums results in a $24,000 investment income to be added to Social Security.
John Smith will earn $50,500 from this one client in the first year, mostly due to exorbitant commissions. He will also earn ongoing fees and commissions every year after. When the annuities are done with their seven-year surrender period, he will find “better” annuities to replace them with, earning additional 7% commissions.
*Firms and financial professionals vary widely in their services and costs. This is an average of what we see other firms charging clients who have come to us.
Case Study: Chuck & Diane
Case Study: Chuck & Diane
(Note: These case studies are hypothetical, do not involve a LaxFP client, and should not be construed as a guarantee.)
Situation
Age: Early sixties
Work: Nearing Retirement
Assets: $1,000,000
Financial Planner
Firm: La Crosse Financial Planning
(Independent Fee-Only Fiduciary Financial Planning Firm)
Professional: Freeman Linde, CFP®, EA
Expertise: CFP®: Certified Financial Planner™ (Comprehensive Financial Planning Expert) | Enrolled Agent (Federally Licensed Tax Expert)
Services Received
Using sophisticated software that generates intuitive and interactive scenarios, Bob & Sue are educated on their financial picture. They are given a One-Page Financial Plan with succinct, actionable recommendations.
Chuck & Diane learn a strategy to be self-insured if something happens to either of them. They also discover a strategy to pay for long-term care without an expensive insurance policy. They agree that insurance isn’t needed, giving them more income to enjoy in retirement.
Because annuities are extremely expensive and therefore underperform, Chuck and Diane agree with Freeman that they don’t need any. They commit to the investment strategy instead.
Chuck & Diane discover the 3D Retirement Income model. It’s the first time investing has made sense to them. They commit to it. 3D Retirement Income has historically returned 10% before fees, though future performance is uncertain. They are free to leave anytime as nothing is locked up.
Chuck & Diane get their essential estate documents, including a trust to avoid probate and delays, with their financial plan. Signed, sealed, and delivered. All beneficiaries are coordinated and aligned automatically, since it is all in-house.
Tax Planning strategies are estimated to save Chuck & Diane $210,000 in extra taxes over their lifetime. LaxFP also prepares and files their taxes each year. Because they already know everything that is going on, tax season becomes quick and painless for the first time ever.
Total Cost
Chuck & Diane get everything for 1.42% of their portfolio, all-in. They’re portfolio is charged on LaxFP’s standard all-in fee schedule (below). Because their assets fall in two brackets, 1.42% is the weighted average.
Financial Planner Compensation
The All-In fee for Chuck & Diane is 1.42%. LaxFP’s fee goes to paying the salaries of the advisors and staff that allow LaxFP to provide all these services.
All Financial Planners and Staff at LaxFP are salaried. There are no commissions and no sales quotas. They get paid the same regardless of what is recommended to the client. Thus, all recommendations are in Chuck & Diane’s best interest.
Results:
Planing, Investments, Tax, Estate, and everything else: $14,150.
The 3D Retirement Income model has historically generated far better income than annuities or age-based portfolios, and the tax planning increases their take-home pay. As long as Chuck and Diane are able to flex a bit each year, they can withdraw between $45,000 and $65,000 per year to be added to Social Security.
They create a base “paycheck” to cover their comfortable lifestyle and an additional “playcheck” which varies each year for additional travel and vacations.
All Financial Planners and Staff at LaxFP are salaried. There are no commissions and no sales quotas. They get paid the same regardless of what is recommended to the client. Thus, all recommendations are in Chuck & Diane’s best interest.
*All our services are charged according to to our fee schedule or $900 per quarter, whichever is greater. Clients with less than $250,000 will be subject to our minimum fee. All-In Services are charged quarterly and require a four quarter commitment. After 12 months you may continue with our All-In Service or switch to Investment Only and pay 1.5% of invested assets (minimum $150 per quarter). See the Financial and Investment Planning Agreement for more details.