Wealth Protection

Taking a 'Business-Like' Approach to Retirement

Customer relationship management is a key component of retirement planning. This includes understanding and managing the client’s expectations of their retirement plans. It is incumbent upon the financial planner to help the client to understand what is possible given their current level of investment, life situation, risk preference and other factors. It requires a degree of objectivity, which can be difficult when discussing an individual’s personal retirement requirements.

Richard P. Moran, CFP®, Senior Financial Advisor with Moran, Heising & McElravey, LLC, believes that the traditional business model, as applied to creating defined benefit pension plans, offers a good approach to retirement planning. Under this model, companies use their employees’ demographics, including salary levels, benefit packages, retirement dates and other information, to calculate how much is required to invest to meet their financial retirement goals. Management projects and tracks the company’s revenues, expenses, debt and other financial information to ensure that the investments fit into the corporate financial plan.

In the same way, Moran’s team of financial advisors acquire the necessary information from their clients to create multi-year cash flow projections to determine what they will need during different stages of their life. This enables them to calculate, and then explain, how much the client must invest over time, given different rates of return, to reach their retirement goals.

“We help our client to understand whether their retirement expectations are reasonable,” said Moran. “If they’re not, then we will counsel our client to either reduce their expectations, or explain the inherent risks of trying to get greater returns on their investments to meet their expectations. We work with our client to develop a personal cash flow anticipation and investment strategy for them.”

richmoran350x250One key advantage of this approach is that, once the plan is in place, it is relatively simple to implement the investment strategy. The groundwork is laid for moving forward. However, it is not a static plan. In most instances, the plan is updated every three years or so to deal with changes in the client’s life status, income level, tax situation, expenses and other factors.

Moran, Heising & McElravey, founded by Moran and his partners in 2004, provides primarily fee-based financial planning and investment advisory services. This includes retirement income planning and spending, simplifying financial management for retired clients, legacy wealth planning for future generations, evaluating past performance and cost of various investment choices, and education funding for children and grandchildren. While the team’s financial advisors work primarily with retired and soon to be retired clients, they have expanded into offering multi-generational advice, as they often deal with clients’ parents, children and grandchildren. They also maintain consistent processes across the organization so that every partner can serve any client and provide standardized advice.

Moran is a Certified Financial Planner™ (CFP®), and has served on the CFP® Board of Practice Standards, where he developed mandatory standards for all 40,000 CFP® certificants nationwide. Prior to this, he was elected to the National Board of International Association for Financial Planning, where he chaired the National Ethics Committee and the Conference for Advanced Planning, and served as president of the Los Angeles chapter. Moran also has a Bachelor of Science in Economics from Purdue University.

boatride250x375Retirement planning includes dealing with the issue of sequential retirement. Moran takes the approach of beginning at the end of the client’s life. The key question involves asking how much they want to leave to their beneficiaries. There are three possible answers in this scenario: all the remaining money, some percentage of their portfolio that will depend on various factors, or nothing. How the client answers this question serves as the main driver to determining the required rate of return to pursue their goals, as well as the allowed level of spending along the way.

This then leads to financing the client’s long-term care requirements. This can be a challenge, as the individual might never need long-term care, and it is unlikely that they will know the exact timing if it does arrive. He will then take a financial planning approach when including long-term care insurance in the plan.

“We might not need insurance to cover all of a client’s long-term care needs,” said Moran. “For example, we could use cash flow from various investments to fund long-term care, or use insurance to fund part of their long-term care needs. The need to fund long-term care might disappear entirely due to an unexpected inheritance or greater-than-expected investment success, or a large decline in spending. We aim for flexibility so that we can change the client’s financial plans when needed.”

For more information on Moran, Heising & McElravey, LLC, visit: smarterdecisions.com

21250 Hawthorne Blvd #560, Torrance, CA 90503. 310-406-3080

Securities and advisory services offered through Cetera Advisor Networks LLC (doing insurance in CA as CFGAN Insurance Agency), member SIPC/FINRA, a broker/dealer and registered investment adviser. Cetera is under separate ownership from any other named entity. CA insurance license #0295570


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