Van Sant wasn’t judgmental of the client’s lack of financial acumen. “People are experts in their field,” he said. “ I’m not going to go home and rewire my house.”
After evaluating the retirement plan where the client was then employed and seeing its menu options weren’t great, Van Sant told the client that he could roll over all the old plans into one IRA that would have one investment strategy and one statement. “He was thrilled,” said Van Sant, who observed the man’s shoulders drop as his stress level fell.
Van Sant sat for two hours with the client as they called all the plan providers. He made sure each rollover was payable to a third party so the assets wouldn’t touch the client’s hands and trigger tax penalties.
The client also owned company stock outside a plan. Van Sant devised a strategy to sell down that stock over a period of years in order to smooth out the gains and enable the client to pay off his home equity line of credit before retiring.
Van Sant initially put 70 percent of the client’s IRA assets in equities and 30 percent in fixed income. He toned back the allocation to a 60/40 split as the client got closer to retirement.
According to Van Sant, the client’s retirement assets have grown from about $450,000 to the $700,000 range since he started working with him nearly 10 years ago. The client is retiring next month and Van Sant is helping him navigate the waters. The client’s wife, who is also retiring, learned about her pension and rollover options during her exit interview for her job but employers often don’t provide this information, says Van Sant.
When the client of another advisor on Van Sant’s team abruptly told a plan representative that he wanted the $750,000 in his retirement plan, the distribution was transacted in a way that triggered a 20 percent tax. To reverse this, the client had 60 days to come up with $150,000 to put back in an IRA, says Van Sant. He and his team have become more cognizant of looking at retirement plans held by their clients and sharing best practices.
For wealth management clients, he said, “a little handholding” can go a long way.