Investing & Economy

Masterplan Helps Middle AMERICA

An increasing number of financial and investment advisors are paying attention to the economic needs of middle America.

Mark Fricks, President and Founder of MasterPlan Retirement Consultants, Inc., based in Marietta, Ga., isn’t one of those advisors just joining this pack – he’s been leading it.

“Middle America is our sweet spot,” Fricks said. “It has been neglected by a lot of advisors who are chasing the super wealthy instead. But middle America is waking up and realizing that they have assets – obviously not as much as the ultra-wealthy – but assets nonetheless, and they want to make sure those assets last as long as they do. They want to make sure that they do not run out of money.”

Fricks’ niche is the client in his or her 50s who has realized that retirement isn’t so far off any longer, and they need some help. They generally have some sort of 401K. It might be worth a half million or even a million plus. But in the mind of these clients, they believe they don’t have a lot of money.

“They have been working their tails off, living within their means and putting money away into a 401K, but they really do not know what it is like to have money at their disposal, because all their lives they have not tapped into that resource,” Fricks said.

That is when it is time to set up what Fricks calls “The Retirement Road Map.”

He likens it to a doctor making a plan of care to treat an illness before prescribing medication or recommending surgery, as well as to planning out a vacation in terms of having a destination, a place to sleep and an itinerary of what to see and do.

“You have to have a plan,” Fricks said. “The first thing we do is to create the yellow brick road. This is the happy trip to and through retirement. Then we start talking about what can happen. We talk about those risks such as inflation, long-term care and market corrections. Then we come up with a strategy to handle those risks.”

Long-term care, in Fricks’ opinion and experience, is the most dangerous threat to retirement income. He quotes statistics that the average stay in a long-term care facility is 3.5 years. On a national average of $6,000 per month, that stay drains more than $200,000 from retirement savings, often times leaving the surviving spouse with a chokingly limited fund.

“The problem now is that long-term care insurance has become so expensive and you have to be pretty healthy to get it in the first place,” Fricks said. “Then, if you do not use it, you lose it. The good news is the industry is responding with some products that are asset-based and allow for the value to be used for other purposes upon death.”

Yet Fricks is not a believer in acquiring financial products simply for the sake of having them. There has to be a good reason.

In 2008, before launching his own firm, he watched the financial services respond to the drastic market correction that followed the burst of the housing bubble by pushing products to clients instead of evaluating the unique characteristics of each one’s financial situation.

“After 2008, I did not understand why we could not help people through this kind of experience. I felt as if so many of the firms were product oriented and were all about what product they could push in an attempt to solve the crisis versus taking the time to talk to the clients and using a more process-oriented approach to discover what really fit their needs. I knew there had to be more to this business than just investing someone else’s money and trying to avoid bombs going off.”

Fricks spent the next two years researching. He interviewed as many advisors as he could to learn how they approached client needs. He listened to webinars, read more articles than he can remember the titles of – and he attended an endless number of workshops in the quest for a better approach to handling client needs.

In 2010, he launched MasterPlan with the goal of providing comprehensive financial planning. His strategy includes meeting with new clients two or three times to flesh out their goals and dreams. This guides his writing of their financial plans. He has an in-house CPA double-check previous tax returns; he has the firm’s insurance specialist review current coverage and make recommendations.

Educating clients about his use of “active management” in monitoring the performance of their portfolios, Fricks has a team of portfolio specialists continually watching market performance. “It is a ‘moment by moment’ monitoring,” Fricks said. “And while it may seem extreme, in 2008 when the market began to move downward, this keen monitoring prevented the extreme losses many other investors experienced.” Instead of 30 and 40 percent losses, his clients saw losses of only two to six percent, because Fricks said that he immediately moved them out of declining investments when his observers signaled.

“I just don’t consider a loss of 20 percent to be a normal thing. It is not acceptable to me,” Fricks asserted. “That is why we outsource this to money managers using the latest technology. They watch to try to avoid the big drop. We cannot avoid those one or two percent losses, but we also do not have to potentially experience losses of 12 or 15 percent per week that others consider acceptable.”

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*The information provided for informational purposes only, and does not constitute an offer, solicitation or recommendation to sell or an offer to buy securities, investment products or investment advisory services. All information, views, opinions and estimates are subject to change or correction without notice. Nothing contained herein constitutes financial, legal, tax, or other advice. The appropriateness of an investment or strategy will depend on an investor’s circumstances and objectives. These opinions may not fit to your financial status, risk and return preferences. Investment recommendations may change and readers are urged to check with their investment advisors before making any investment decisions. Estimates of future performance are based on assumptions that may not be realized. Past performance is not necessarily indicative of future returns.

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