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The 3 Secrets of Wealth Accumulation

Very few Americans have a truly optimized savings strategy. Even those who have a financial advisor aren't necessarily getting a full picture of their finances.

Wealth accumulation, in the context of the Financial Advocate Attorney, is all about helping our clients reposition assets and income so that their savings grow as efficiently as possible.

Secret #1: Most Savings Strategies Aren't Optimized

There are several common savings opportunities I see in my clients on a day-to-day basis.

The first is repositing assets out of their 401(k). Many of my clients, the younger ones especially, put all their savings in their 401(k). Most of them don't realize that this money will stay in tax jail until they turn 59 and a half years old. When these clients age into retirement, this becomes an even bigger problem. Leaving all their retirement savings in their 401(k) exposes them to unnecessary market risk.

For many clients, repositioning some of those assets into a Roth IRA or life insurance contract better protects their funds. When clients shift their mindset from pre-tax to after-tax savings, they can achieve their financial goals with lower required rates of return. They don't need to have their investments in a high-risk vehicle anymore.

Another opportunity consumers rarely take advantage of is alternative ways to save for college. Most families look towards a 529 plan. While this is a great option for some people, it is also a bit risky. Sometimes, 529 plans don't perform the way we expect them to. Also, the funds saved in a 529 plan may only be used for educational expenses, lest the family pay a major tax bill. What happens if the child decides not to go to college, receives a scholarship and doesn't need the funds, or if the price for college is significantly reduced in the future?

There are other options out there. For example:

  • A brokerage account, which is taxable but offers more flexibility

  • A life insurance policy with cash value, which offers tax benefits and flexibility but can incur additional costs

  • Student loans as a last resort

The True Cost of Debt

Debt can be a major barrier to savings. According to the Bureau of Labor Statistics, about 25% of a person's income goes to paying off debt. Many consumers attempt to follow Dave Ramey's 'Debt Snowball' strategy, but it rarely works, not because the math behind the strategy isn't sound (it is) but because the lifestyle you must lead to get there is too restrictive. No one wants to be eating beenie weenies and ramen noodles every night.

Once again, there are better options.

In my practice, we use the Debt Free 4 Life program and most of our clients can become completely debt-free in six years or less. While they pay off debt, they also build cash value tax-free in a specially designed insurance contract. When they need a new car or a new house, they never have to be in debt again. They become their own banker. This is all done simply by repositioning the way they save and pay their bills.

Secret #2: A Few Adjustments to Your Client's Savings Strategy Can Yield a Huge Benefit

The most important lesson I've learned as an estate planning attorney is that small changes can have a huge impact on a client's financial well-being. I help them reposition assets and income into tax-advantaged vehicles so they can save more, keep up with inflation, and secure their future.

I examine my clients' current strategies and look for ways to optimize their savings. This includes looking at their investment mix, retirement accounts, insurance contracts, mortgages, and other forms of debt. I then recommend changes to maximize their returns while minimizing risk.

The end result is often significant: with a few adjustments to their portfolio, we can change lives.

Secret #3: Helping Your Clients Adjust Their Savings Strategy Lead to More Referrals

If you can help your clients cut taxes and debt, imagine how much more disposable income they would have to go to their savings and lifestyle. Imagine how much they would appreciate you for improving their financial future!

There are countless opportunities existing in your current client base. By addressing issues like debt reduction and optimizing savings, you will become invaluable to your clients. Clients, in turn, will provide greater value back to you. Happy clients lead to more referrals and a stronger reputation in your community.

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