Meet Mike and Kathy Davis*

Our clients, Mike and Kathy Davis, were a few years from retirement when they started working with Paradigm Financial Advisors.

Mike was close to retiring as a cardiologist from the practice he had been part of for over 30 years.  Kathy was looking to retire after having been a principal at the local high school district.  However, neither wanted to make a firm commitment since they didn’t want to make a mistake and give up their incomes too soon.

They came to Paradigm Financial Advisors through a referral from a close family friend, who recommended they work with a fee-only fiduciary advisor to minimize conflicts of interest.  They had previously worked with a broker from a large brand name firm, but he didn’t seem comfortable talking about anything outside of investments.

Their first concern was making sure that they were okay to retire within a few years.  While the couple had significant income, they also had a lot of expenses including a vacation home in a ski resort.  They did not want to compromise their lifestyle in the future.  Additionally, they had experienced significant losses in the previous recession, and also had lost money on an investment in a relative’s business venture.

How We Helped

We started working with them by getting to know their goals and how they’d like to live in retirement.  That included projecting out financial needs now and in the future.  We also held several follow up phone meetings to continue to gather information.  Once that was complete, we started to build a complete financial plan for them.

At the time, they were considering downsizing their primary home or selling their mountain home.  We worked with them to determine a strategy that would allow them to enjoy life while also reducing their monthly expenses.

They also were concerned about leaving money to their family in a way that ensured the money would be handled responsibly.   We helped them create a comprehensive estate plan that included strategies to protect the assets from divorces, lawsuits, and other threats.  Because implementation was also handled by the Paradigm team’s attorney, Mike and Kathy saved considerable legal fees during this process.

Mike had a large 401(k) plan and he wasn’t sure what he should do with it once he retires.  Kathy would be eligible for her pension, but there was also the offer of a pension buyout.

We began working through issues sequentially and creating plans for each:

• First, we reviewed their investments and created an Investment Policy statement with them to help determine how their money would be managed.
• We diversified their investments to help strive to minimize their exposure to excessive volatility.
• We ran an analysis to determine their best strategy for filing for social security benefits.
• We analyzed Kathy’s pension buyout plan and helped her determine what made the most sense.
• We helped Mike rollover his 401(k) into an IRA and invest it in a diversified portfolio suited to their risk tolerance.
• We helped them set up tax-advantaged accounts for their grandchildren’s college expenses.
• We helped them review their health care expenses and the need for long term care insurance.
• We started holding annual tax planning sessions to look for strategies to reduce their income taxes.
• We started to hold family meetings every year to help educate future generations of their family on smart financial habits.

Today, we continue to meet with Kathy and Mike twice a year, sometimes by phone when they are at the ski resort. Most recently, we’ve focused on reducing their taxes by helping them find more tax-efficient investing strategies.  We continue to provide them with full-service financial help, which recently included assistance refinancing a mortgage and buying a new car.

*This material is hypothetical in nature and not intended for use as investment advice.  It does not guarantee the attainment of your retirement goals.  Individual results may vary.  There is no assurance that any investment strategy will be successful.  Investing involves risk and investors may incur a profit or a loss.  Asset Allocation and diversification do not ensure a profit or protect against a loss.  Past performance is not indicative of future results.