Wealthcare Case Study “The Schmidts” Sales Done Right And Service?

2 The “Schmidts” In 1998 Walter & Lorraine – Age 70 & 69 Recently Retired $1,500,000 Portfolio –Mostly Mutual Funds Walter Picked (Strong & Nicholas) –Heavily weighted toward bond funds

3 The “Schmidts” In 1998 Investment Objectives & Goals: –Avoid Risk –Protect Retirement Income From Inflation Ideally $100,000, but could get by on $75,000 –Plus: Annual Trips to Jamaica & Germany ($35,000 a year) –Let the kids get their own estate –Did I mention avoid risk? Other Facts About The Schmidts –Swim daily in their indoor pool (in good health) –$60,000 a year in pensions/SSI – Most without COLA –Lorraine’s 90 year old mother lives with them (in good health) –$500,000 Home – “They will die in” –They drive Hondas

4 The “Schmidts” WERE SOLD With Wealthcare – Gathered All The Assets! Because you followed the Wealthcare presentation process of identifying their range of goals Understood Their Priorities

5 The “Schmidts” WERE SOLD With Wealthcare – Gathered All The Assets! “Stress Tested” Their Comfort Factor

6 The “Schmidts” WERE SOLD With Wealthcare – Gathered All The Assets! And Presented Recommendation That Focused On Their Priorities

7 Since Walter Likes Mutual Funds… You Implement With Auto-Rebalance “Risk Averse” Portfolio –They are on “auto-pilot” –They get regular performance reports –Your semi-annual client letter –And you get: $12,000 a year gross NEXT! –Since “THE PLAN” Closed Them –It Served Its Purpose –Let the reports “service” the client –And move on to look for more “Schmidts”

8 A Couple Years Go By…2000 You haven’t talked to the Schmidts in a couple years You have been focused on trading out of tech stocks And Pitching Prospects on Wealthcare And tax efficient portfolios to harvest losses You didn’t notice there was an extra $15,000 that came out of the Schmidts’ portfolio When your assistant brought it up you thought they probably prepaid for a deal on one their trips, bought another Honda…

9 A Couple Years Go By…2000 What has been going on with the Schmidts while you were letting them “autopilot”… Lorraine’s mother had a stroke –The extra money they withdrew was to pay for in-home care Walter’s younger brother just passed away –Heart attack at 58

10 A Couple More Years Go By…2002 You basically haven’t talked to them in four years: They contact you –They need $100,000 from their account You mention that you are glad they called –Been meaning to get together with them to review their performance with the bear market and all –They schedule a meeting with you You show them their performance reports –Considering the markets, they have done well –You also updated their Wealthcare Report showing the inflation adjusted values This looks good too, especially with all of the unplanned withdrawals and the bear market Comfort Factor STILL 84!

11 They Say That’s Great…Except: Some of their goals changed… Their expenses went up because of Lorraine’s Mother’s Care –Before they did anything, they reviewed the Wealthcare Report –But they could tell they couldn’t take out an extra $25,000 a year –So, they got a reverse mortgage –She just recently passed Anyway, she had a small life policy –The insurance agent sold them Long Term Care policies “We saw how expensive home care can be” So the money for that is coming from the reverse mortgage That way we can stay in our house, no matter what You say you are sorry about her mother –And ask –“So what’s the $100,000 you want to withdraw for?”

12 They Say…“We Have Become Quite Involved With Our Church” You see, Walter’s brother died a couple of years ago… It was a sudden Heart Attack –Thankfully Walter doesn’t share that gene –But he really had a hard time dealing with such an unexpected loss…our church really gave Walter his life back Anyway, while we didn’t want to leave anything to the kids –We do want to leave what we have accumulated to the church –Our insurance agent sold us a second to die policy We are using the $50,000 from Lorraine’s mother’s policy And the $100,000…to make sure we leave $1.5 million to our Church –One single premium is all it would take he said –It will be used to help widows and widowers

13 Forensic Finance – YOURS What Went Wrong? Like Most Advisors Would Do You identified their range of goals, risk tolerance & priorities –Avoided unnecessary risk –Focused on their priorities –Gave them comfort they could achieve their prioritized goals –Without sacrificing their lifestyle You implemented a risk averse portfolio –Automatically kept in balance –And diligently delivered performance reports –Four years later they are still squarely in the comfort zone – 84 BUT….

14 Forensic Finance – YOURS What Went Wrong? They are comfortable about achieving OLD GOALS “What Have You Done For Me Lately” – Insurance Agent Was There When They Were In Need… You’ve made $48,000 gross over the last four years THE INSURANCE AGENT MADE THAT THIS YEAR! Plus the mortgage broker made $2,500! Updating for new goals ($1,500,000 estate, withdraw $100,000 for policy) their current plan’s comfort factor is: 40 You schedule a follow up meeting to show them the analysis…but ask a few more questions first….

15 Updating Their Goals & Priorities… How important is that estate goal? –CRITICAL…willing to take more risk, reduce retirement income Trips still a priority? –YES! What about that reverse mortgage…using it all? –There is $13,000 more a year they could take

16 The Revised Recommendation… Can get back to comfort level if: Retirement income stays below Ideal at $102,500 Balanced Income Portfolio (45% stocks) Use the $13,000 a year from reverse mortgage Also, you suggest they get together quarterly to monitor not only their portfolio… But their priorities & goals

17 Revised Goals & Recommendation New Priority – Estate Goal (funded with 2 nd to die policy) Original $100,000 to $75,000 adjusted for 4 years of inflation To meet NEW PRIORITIES: Accept more risk, reduce retirement income and use funds from Reverse Mortgage

18 Had This Advisor Monitored His Clients’ GOALS & PRIORITIES, not just performance He would have: –DOUBLE the production…$48,000 MORE –Client would have stayed on track to meet their goals –Avoided the embarrassment of not being there at the loss of Walter’s brother, or Lorraine’s Mom

19 The Wealthcare Process Is an extraordinary sales tool But, the nature of the process also makes it: –Fantastic for monitoring –Powerful for servicing –And incredible at generating additional business All while focused on meeting the client’s goals!

20 Wealthcare –Comfort In Achieving Prioritized Goals –Without Unnecessary Compromise to Lifestyle –Avoiding Undue Investment Risk