Kate & Ed
Care Taker | Age: 68 & 70
Primary Goals:
- Get Family Finances in Order
- Improve Investments
- Create a reliable income stream
Situation
When I met Kate, she struggling to get her arms around her financial situation. Kate was 68, and taking care of her husband Ed who had started showing signs of Alzheimer’s several years earlier. Ed had taken responsibility of the finances and investments throughout their marriage and now was incapable of teaching Kate how to take over. Kate had never been taught about money or how to manage it.
Ed had a relationship with a broker in New York and the broker specialized in bringing investment ideas to his clients. Kate was not equipped to make decisions on the brokers recommendations so the broker stopped calling and subsequently the portfolio sat dormant. Their CPA had suggested a “safe” portfolio of fixed income but the yields were not sufficient to cover her annual expenses and she was afraid that within time they might run out of money.
Process
Kate needed help and found me through her attorney. We started with a dialogue where I listened to her story and concerns. Kate had learned a lot of concepts over the past couple of years and had a lot of good ideas. I asked her to put products and strategies on hold until we better understood what was most important to her.
We discussed her values and goals and sorted through those issues with which she had the greatest control. Upon reflection we found that in addition to income needs she had a passion for her church, a desire to educate her grandchildren, and some estate planning considerations.
We prioritized her objectives and stress tested each of them based on her current portfolio and then again based on a more flexible design. Being able to see and understand the benefits and weaknesses of various approaches allowed Kate to have the confidence to move forward on a plan to efficiently address her goals.
Results
We discovered that Kate had the financial capacity to achieve most of her desired goals but we would have to restructure her portfolio to better align with her objectives. We kept a similar risk profile but placed a greater focus on total return and greater diversification.
After consultation with her CPA — a portion of her new income stream incorporated a more efficient use of gifting to her church and providing funding for an education trust for her grandchildren. She was able to pay off her credit card and we continue to monitor her plan both in light of investment performance and her current positioning on the roadmap we have created. We additionally referred her to a dementia support group that is working with Ed to see if they can help improve or at least stabilize his quality of life.
*These are case studies and are for illustrative purposes only. Actual performance and results will vary. These case studies do not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted. These case studies do not represent actual clients but a hypothetical composite of various client experiences and issues. Any resemblance to actual people or situations is purely coincidental.
