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Financial Planning

Financial Planning


            The WPI does not education on the many ways a client can invest their money in the stock market.  Having said that, The WPI does believe in taking the least risky approach necessary to help clients reach their financial goals.


            Side note:  Do not forget that the best financial plan can be wiped out by a negligence suit. NO financial plan can be complete unless the plan incorporates asset protection.


            Investment goals


            What are your client’s investment goals?  Do you think most of your clients have sat down with a quality advisor to lay out their investment goals?  Most clients have not.  Most clients simply put their money in the stock market and hope.  Hope that they chose the right stocks in their E-Trade account or 401(k)/IRA or that their “money manager” is doing a good job for them.


            How have your clients done with their investment portfolios over the last 5, 10, 20 years?  How have you done?


            Predicting the future


            Do your clients believe the stock market is going to average double digit returns anytime soon?  Do they worry about their money going backwards in a Bear market?  Do they worry about the next 9-11 or next war that will erupt around the world that will affect oil prices and the stock markets in a negative manner?  Can your clients or their advisors predict when the next downturn or upswing in the market will come or when the next hurricane or earthquake will come?  Can anyone predict who will be elected as our next president and Congress and what financial policies they will implement? (which will have far reaching affects on our economy)


            We are poking a little bit of fun at all the variables of investing to make a point.  If we are honest with ourselves, we will admit that none of us know which individual stocks or mutual funds will be going up and down or when the next big national or world issue will come up that will affect our actively traded money.


            Buying high and selling low


            When you read the next few paragraphs many of you will be nodding your heads and a painful smile will come to your face.


            It is our opinion that over time the stock market will go up but that we don’t really know which stocks will be the big winners.


            For example, won’t you agree that your clients would have purchased Wal-Mart: One of largest companies in the world; consistent earner; pays dividends in July of 2003 instead of K-Mart: Just emerging from bankruptcy; big marketing tie to Martha Stewart (who was looking at jail time); no anticipated dividends. How would they have done? Wal-Mart went from $56.08 to $51.76 and K-Mart went from $24.20 to $76.80.


            Did you know that during the biggest bull-run this country has ever seen (1984-2002) the average investor did less than 2.7% when the average mutual fund returned just under 10% and the S&P 500 returned over 12%.  Why? Because we are professionals at buying high and selling low.


            Asset allocation


            Again, we believe the market as whole will go up long term.  The question is how much of your client’s money should be at risk in the market.


            You’ve probably heard this: the older you are the fewer years you have to recover from a down year in the market and therefore as you get older you should transition yourself into investments with “principal protection.”  How many people had their lives crushed when the stock market tanked in 2000?  How many people had to go back to work because they couldn’t retire due to the crash? How many people who couldn’t find work have to live a retired life that is no where near what they had planned?


            Is it a fair statement that we should only take as much investment risk as possible to reach our financial goals?  If that’s they case, then why is everyone risking everything they have in a stock market where the average investor during the biggest bull market returned only 2.7%. Why are clients who are near or in retirement risking a significant percentage of their invested portfolio to market risk?  Because that’s what most clients know and what most advisors advocate.


            A better way?


            Equity Harvesting (EH) (and the 1% CFA Mortgage)


            What are your client’s ultimate goals with their financial plan?  Is it simply to grow their wealth to the largest amount possible and be able to retire in a manner that is comfortable for them? If that is the case, then your clients should explore one of the last tax favorable plans the IRS allows.   EH is a tax favorable wealth building system based around using a home mortgage deduction in a strategic manner for the client’s benefit.  If your clients can understand simple math, they will like this topic.  Due be careful with this topic and steer clear of marketing firms who stick to the strict interpretation for how to use the principals of Missed Fortune 101 and The Infinite Banking System.


            The Maximizer


            While no topic is a cure all, the Maximizer is a very interesting concept that we believe you will take an interest in.  If you think you clients would like the concept of nearly doubling the returns of the S&P 500 index while principally protecting 90% of their money from downturns in the stock market, you should review our summary on the Maximizer.  We guarantee your clients will like it.


            Equity Indexed Annuities (EIAs) (Also known as Fixed Indexed Annuities)


            If your clients could look back 10-20 years and have earned 5-8% on their invested dollars in a tax deferred environment, would they be happy?  Would it help if during that investment period they could never lose principal on their invested dollars in down years and the gains in every up year were locked in? Most clients would.  That’s the kind of return your clients would have had if they have invested in different types of EIAs.  Many brokers and money managers advise clients to stay in a variable market using stocks, mutual funds and variable annuities, but we believe many clients would be better off long term by allocating some percentage of their money into EIAs. 


            Qualified Plans/IRAs


            As part of any financial plan, clients should be taking advantage of any ability to income tax deduct money into a qualified plan or IRA.  The WPI has terrific course material on 401(k), profit sharing, defined benefit and 412(i) defined benefit plans.  The WPI also covers “carve-out” planning which most business owners will like due to the fact that such a plan dramatically skews contributions in favor of key employees.


            We did want to remind you that it is important to remember that your clients can purchase Equity Indexed Annuities and The Maximizer inside a qualified plan or IRA. This is a terrific idea as an asset allocation model for any client over the age of 50.  If you are an attorney or CPA/accountant/EA, DO NOT tell clients it is a bad idea to buy EIAs in qualified plans or IRAs. It is a terrific idea as client get older (not because of the tax benefits, but insted, beause of the principal protection and good opportunity for upside growth).




            As stated above, The WPI does not educate on the multiple ways to manage money in an active stock and mutual fund environment.  The WPI’s philosophy is one of asset allocation and taking only as much risk as necessary to achieve one’s financial goals.  As a general statement, the vast majority of clients are taking too much risk and when educated on the available tools, many clients will diversify and be better off financially 5, 10, 15, 20 years down the road.


            As a CWPP advisor, you will be armed with the needed tool so you can provide complete advice to your client when it comes to protecting, growing and preserving their invested dollars.


            Sign up now to become a CWPP advisor by clicking here.


© 2017 The Wealth Preservation Institute • St. Joseph , MI • (269) 216-9978