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The following case studies represent a small sample of what we have seen. These are typical. Many financial service firms hide the cost of their services and make them difficult to find or calculate. Total costs include commissions, mutual fund expenses, insurance costs, 12b-1 fees, loads, and asset based fees. Trading costs and taxes are also a large cost that are often very difficult to calculate. At Brown Wealth Management, we are very careful to keep trading costs and tax impacts to a minimum.
Retired Business Owner Client Previously with Firm with Proprietary Products:
A retired business owner and his wife came to us after being with an advisor associated with a full service brokerage firm for over 10 years. These clients had investments of approximately $1.3 million. The clients were invested in high cost proprietary mutual funds and high cost annuities and life insurance. There did not appear to be an overall strategy. The clients were concerned they were being sold investments and products that generated high commissions for the advisor. They felt they were not getting objective advice. We were able to reallocate their portfolio to a well diversified portfolio both domestically and globally. We transferred their annuities to a lower cost option. We were able to convert their insurance policies into lower cost insurance that provided more coverage. Overall we lowered their annual investment expenses by an estimated 2% per year. This corresponds to an annual savings estimated at over $26,000 per year. This could save them over $260,000 over the next 10 years. The client now has a solid plan in place that we review regularly.
Widowed Client Previously with Full Service Brokerage Firm:
Widowed client with $4 million was concerned that she was not receiving objective advice. The previous advisor was constantly recommending items she did not understand. She had no knowledge of how he was paid, that he was receiving commissions or the amount of the commissions or total costs. The client came to us with 5 IRA accounts with no clear overall strategy. Each IRA was invested in many individual stocks, high expense mutual funds, and higher risk bonds. The client was invested much more aggressively than she needed to be and was taking much more risk than was necessary to achieve her goals. The client was incurring trading and commission costs in each IRA. We consolidated these 5 IRA's down to 1 IRA. We reallocated the portfolio to be more diversified both domestically and globally. We reduced the risk of her bond portfolio. We reduced her annual costs by approximately 1.5% per year. This represented an estimated savings of $60,000 per year. This will save this client approximately $600,000 over the next 10 years. The client now has a solid plan in place and is receiving objective advice that is in her best interest.
Widowed client previously with Full Service Brokerage Firm
Widowed client with $800,000 had been working with a full service firm recommended by her CPA. She had been sold high price annuities and commission products. The client did not know how much the commissions were or what the total costs were. We were able to restructure the portfolio into lower cost investments and eliminate one of the high cost annuities entirely. The client now has a solid retirement income plan in place that is well diversified and has low costs. We are able to save the client approximately 1.4% in total costs per year, a savings of approximately $11,200 over one year, and an estimated $112,000 over ten years. This is savings that is reinvested in the portfolio or is able to be used for additional income in retirement. We meet regulary with the client to review her plan and portfolio.
Free Offer:
As part of our no-cost introductory meeting, we provide a free portfolio review to calculate the expenses you are currently incurring in your portfolio. If we are unable to save our fee, we won't accept the engagement.
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