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I own what?!

Getting back on track - a shocking discovery


The challenge

A prospect called us and confessed she had $1.4 million invested with another advisor but wasn’t sure what she was invested in or if it was appropriate. She said she had worked with the advisor for several years but she was still in the dark regarding her money and how much she could spend.

The challenge was to dissect her asset allocation, investments, fees she paid, and help her figure out how much she had and what she could afford in retirement.


What we did

The first step was to get a copy of her latest investment statement. We then plugged her holdings into a software program that analyzes the allocation, investment fees, overlap, and risk. We also scoured the statement for fees the other advisor was charging. While conducting this research, we talked to her about her business, income, and expenses. We also reviewed her taxes, investment gains/turnover, and estate plan.



The outcome

  • Our immediate analysis shocked both us and the prospect. Her entire retirement portfolio was 98.6% invested in stocks. And to make matters worse, it was heavily weighted to volatile technology companies – many small and many in China. The prospect showed us communications from the advisor that the portfolio was “well diversified” and “appropriate based on your age and risk tolerance.” Additionally, we found that the advisor was charging 2% per year for his services. Lastly, the portfolio had almost all short-term gains, which were taxed as ordinary income.
  • We recommended a more prudently allocated portfolio for her situation and low risk tolerance and cut her fees by over half. We shifted the investments with high turnover (producing short-term gains) and high income into her retirement accounts since these accounts were tax-deferred. We then weighted her taxable accounts with more long-term growth oriented investments since these are tax more favorably.
  • Although her net-worth was over $5 million and she owned real estate, she had no estate plan. In California, probate can be costly and can take over a year or more. We introduced her to a local estate planning attorney and sat in on the planning meeting with the attorney. Once the living trust was created, we re-titled her assets into the name of the trust and updated her beneficiary designations.
  • In addition, and most rewarding for the client, the financial plan we created gave her confidence she could enjoy a comfortable retirement and she is now much more involved in her finances and is enjoying learning about her investments and her finances.


These examples are for illustrative purposes only. Any strategies referenced herein do not take into account the investment objectives, financial situation, or particular needs of any individual. They should not be considered individual advice, suitability must be independently determined. Individual results will vary and may be more or less favorable than in the examples shown.

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