Have questions but all of my savings are in my 401(k) plan

Client: Jeff

Primary Goal: Receive professional investment management, purchase a home, come up with a retirement timeline.

Background:

Jeff, a 50 year old disciplined saver decided at age 33 that it was time for a career change. He was experiencing success in pharmaceutical sales but decided he wanted to pursue something more aligned with his interests and talents. Jeff’s career change required him to take a pay cut and move to a higher cost of living area. For a few years Jeff had to dip into savings to cover expenses until his income grew to a point where he could start saving again.

Jeff recently took a promotion that requires less travel and allowed him to move closer to family. Now that Jeff is 50 and has more certainty with his career and where he will live long term, he would like to purchase a home and begin coming up with a plan for retirement.

Jeff has a 401k held at Charles Schwab with $1.1 million and 300k invest in cash and other conservative investment vehicles. Jeff has interviewed several advisors but hasn’t found anyone that can or will help him because he didn’t meet their minimum investment due to the fact that he plans to use most of his cash for his downpayment and the rest of his money is tied up in his 401k plan. He doesn’t plan to retire until 62 but wants to start planning far in advance in hopes that he can retire earlier.

Approach:

During our initial call we could sense the level of urgency in Jeff’s voice when he said that he needs help but hasn’t been able to find an advisor that will help on an ongoing basis because most of his funds are tied up in his 401k plan and he cant meet their minimum investment.

First, we explained to Jeff that we don’t have a minimum investment/account size at Wyze Wealth. Second, we explained that we work with many clients who’s primary savings are in their 401k plan through a “self directed brokerage window” which is offered as a benefit by certain employers. The self directed brokerage window gives us as advisors the ability to professionally manage a 401(k) account while an employee is still working. We are able to use investment options outside of the limited menu of mutual funds that is available to employees. The account stays at Schwab and doesn’t affect employee or employer contributions.

After our initial call we did some digging and determined that Jeff’s company offered the self directed brokerage window benefit. When we got together with Jeff for our next meeting and informed him of our findings, he expressed a sense of relief in knowing that he can start planning for retirement years in advance.

Once we determined and informed Jeff that we will be able to help him sooner rather than later, it was time to start gathering information so we could put together his Retire Wyze Assessment and show him how we would help.

Results:

The solutions we recommended benefited Jeff in the following ways:

  1. He was able to access expert level portfolio management by taking advantage of the self directed brokerage window (formely known as “Personal Choice Retirement Account (PCRA)” at Charles Schwab) benefit that his company offered him. This gave him access to a larger universe of lower cost investments with constant oversight by his team of advisors at Wyze Wealth.
  2. We had in depth conversations about his expenses and came up with a budget first his home purchase. We helped Jeff determine the optimal balance between home much he should finance and how much cash he should keep liquid for emergencies.
  3. Lastly, in the early stages of retirement planning we came up with a suitable retirement age of 62 given his lifestyle, ability to save and risk tolerance.

Jeff has been a client for 8 years now and plans to retire next year. By revisiting his plan twice per year, we were able to improve his probability of success for retiring at 59 and not running out of money as compared to his initial target retirement age of 62 when we first started working together. Jeff has had such a positive experience at Wyze Wealth that he referred a co-worker and his older siblings.