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Retired Sales Operations Manager Saves $45,000 Annually in Fees & Expenses Thumbnail

Retired Sales Operations Manager Saves $45,000 Annually in Fees & Expenses

Retired Sales Operations Manager Saves $45,000 annually in Fees and Expenses by Switching to Meenes Wealth and His Golf Game Has Never Been Better

When one takes an objective look at the current advisor models, it’s not difficult to see that they are inherently flawed. You can find more detailed information on the current models here, but I would like to provide some real life examples to illustrate just how beneficial the complexity-based fee model has been for my clients—not only from a financial perspective, but a personal one, as well.

The Client Profile: 

  • Retired sales engineer with about $4 million in investable assets.
  • Married with grown children and grandchildren.
  • Active retirement lifestyle including golf, family visits, and travel.
  • Both partners emotionally-driven decision-makers.

The Problems: 

There were a few problems to contend with in this couple’s situation. 

1) The couple had been working with Fidelity for their asset management needs for almost 20 years, but were shocked to learn how much they were paying in investment and fund management fees. With such little attention being paid to goals and personal retirement needs, he began to question what exactly he was paying for. What was he getting from Fidelity in exchange for these very expensive and growing fees? Beyond the annual meeting, he felt dissatisfied with his level of service.

As a retired individual, he knew that the longevity of his portfolio was of utmost importance and didn’t feel that the proper care was being taken to ensure he could continue to live his active retirement lifestyle and still leave a legacy to his heirs. He had no reasonable idea how much he could comfortably spend in retirement at any given time and needed more guidance.

2) Emotions. Emotionally driven investors tend to make terrible choices with their investments. According to decades of research performed by the DALBAR and an entire field of study known as behavioral finance, emotions cause individuals to make poor money moves (especially those not under the guidance of an advisor).

Luckily, this couple had the wherewithal to know this about their habits and were able to express that as part of what they needed from their financial advisor. But, in their relationship with Fidelity, there was no support in this area. If this individual had questions about market movement or needed to be assured his portfolio was being taken care of in volatile markets, he was met with curt, untimely replies that made him feel his money and future were in jeopardy.  If this individual had questions about spending more or less of his income—crickets. This client felt he and his spouse were flying blind from a financial standpoint.

3) Aging. Cognitive acuity and clarity tend to decline as we age and age doesn’t discriminate. No matter how intelligent you are, how successful you are, or how physically in shape you stay, aging affects us all. The result is that decision-making can become more difficult over time, whether you are under the guidance of an advisor or a DIY investor.

This is where having a true financial partner who is a fiduciary comes into play. As decision-making becomes more difficult, you want to be able to lean on an advisor you can trust. Of course, an advisor is by no means a proxy for your own decisions, but can help guide you in the most advantageous directions as your life changes.

Meenes Wealth Solutions: 

First and foremost, Meenes Wealth got to really know this client: where he came from, where he was headed, and what he wanted out of his retirement. There is simply no way to truly help someone “live life on their own terms” if you don’t understand what those are. Nor can you help guide them through life changes if you don’t understand their values. 

Then, we offered this client a more customized approach to his needs that saves him and his family about $45,000 annually in on-going fees and expenses. The amount he saves in fees is reinvested in his account where they can be left to accumulate and compound over time for himself, his spouse, and his children and grandchildren.

Now the money that he saves on fees and expenses year over year stays invested to grow and compound over time for his family. It isn’t eaten up by fees and expenses. These savings translate into hundreds of thousands over time, and in fact possibly millions of dollars as you will see in the illustration below.

1) Fee and Expense Savings Invested Over Time

See the charts below for a representation of the growing power a client can realize when their money stays invested rather than when it is liquidated to cover higher annual fees and expenses.

The top two charts illustrate the potential total portfolio management expenses and fees savings over time when working with the Meenes Wealth Complexity-Based fee model versus the traditional AUM model. Note that over $200K is saved on a $3 million portfolio after only 5 years and an additional $1 million is saved after 12 years on total fees and expenses. Both charts are based on the same annualized return. 

This third chart illustrates the potential growth and combined fee and expense savings of a $3 million portfolio. The Meenes Wealth portfolio significantly outpaces the AUM portfolio, after 35 years, it nearly doubles where the value of the AUM portfolio would have remained. The difference in account values are a result of different fee structures as both the Meenes Wealth and the AUM portfolio assume the same annualized returns.

With the Meenes Complexity-Based fee structure, clients are able to keep more of their money invested to grow and work for them over time. This maximizes how much the client can do and spend later in life.

2) The Meenes Complexity-Based Fee Model

The real problem that contributes to this loss of potential wealth for sales professionals is the way most big company “advisors” are compensated. Fundamentally the most popular compensation models are either (1) based on a percentage of the client’s Assets Under Management (AUM) or (2) from the sale of certain financial products with transaction fees. In the Assets Under Management model, the advisor charges the client based on a percentage of the assets they manage on the client’s behalf, typically ranging anywhere from 1% to 5%. If an advisor is compensated based on product purchases with transaction fees, he or she receives payment from the financial or insurance products clients purchase through them. Both these models present far too much conflict of interest between the advisor and the client, making them inherently flawed.

The complexity-based fee model, however, eliminates these problems. Our fees do not increase simply because your wealth increases. The year after year fee savings you may achieve remains yours to compound and accumulate over time. Our model enables you to retain more of your returns to continue building upon your wealth. 

3) A Personalized Approach and Fiduciary Ally

Not only do we provide investment management, but guidance on cash flow management, retirement planning, estate planning, insurance planning, and tax planning. Most all of your financial bases are covered with our comprehensive service model. You won’t be handed a run-of-the-mill portfolio allocation and sent on your way until the next year’s annual review meeting. You receive on-going fiduciary financial advice from an ally you can trust for ongoing advisement when you need it most. And the advice you receive is always custom tailored to your unique needs and challenges as a Sales Professional.

Successes: 

  • This client saves over $45K annually by partnering with Meenes Wealth ($15K in AUM fees and        roughly $30K in fund management expenses).
  • His annual average fund management expense rate dropped from approximately 1.35% to roughly .25%.
  • He is realizing a higher probability of success with our custom approach and lower fee schedule.
  • His portfolio retains more of his wealth to compound and grow over time.
  • Client receives high-level, custom advisory services tailored to unique retirement lifestyle as well as ongoing portfolio management.
  • Client has a trusted ally to rely on as decision-making becomes more difficult.
  • Now this client is teeing off more frequently with better scores, traveling more extensively to visit family and friends, and spending three months out of every year in Hawaii.