Streamlining your retirement plan

Jim Marren

Jim Marren

Consolidation is one of the most important things a business owner can do as they start to prepare for retirement. We have found that in today’s world, people collect financial accounts like some people collect shoes. Is your financial closet full?

If you are like most business owners we work with, the answer is probably yes. How did this happen? You did not plan to have multiple accounts, but it just seems as if it just happened. You are not alone.

In the past, a retiree typically had a company pension, a bank account, and their Social Security check. In 1978, the retirement landscape as we know it changed with the introduction of the 401(k) plan. The burden of saving for retirement transitioned from employer to employee. This change created an explosion of growth in the financial services industry. Wall Street moved to Main Street and the rest is history.

How many accounts and advisors do you currently have? When was the last time you took the time to inventory all of your financial accounts? Start with your bank accounts. How many financial institutions do you bank with? It is not uncommon to use a different bank for your personal and business accounts. We believe this makes sense from an asset protection standpoint, particularly if you have an entity structure such as an S corporation or a limited liability company (LLC) in place.

It is important to keep accurate records to keep your entity compliant with applicable laws. Some business owners use their business as a slush fund to operate their personal lives. Online banking has made it too tempting for a business owner to succumb to this mistake. We recommend two separate institutions for our business owner clients business and personal accounts. This division of assets gives the business owner a better chance to keep their corporate veil in place and their entity in compliance with the Internal Revenue Service.

We do not believe it makes sense to use more than one financial institution for personal accounts. One reason some of our clients were forced to bank with multiple institutions in the past was due to FDIC deposit limit laws. During the great recession of 2007 to 2009 the FDIC limit per depositor was greatly increased. According to the FDIC, “the standard deposit insurance amount is $250,000 per depositor, per FDIC-insured bank, per ownership category.” Many financial institutions work with the CDARS network which allows a depositor to consolidate their certificates of deposit through one institution even if they exceed traditional FDIC limits. The network spreads the client’s deposits amongst multiple financial institutions without the hassle of managing more than one bank relationship.

Many of our clients have benefited by consolidating banks. Many bank fees are waived once a certain asset threshold is met. In addition, you are more likely to be treated as a valued customer if your balances are larger. Pick the institution that works best for you. We recommend large national banks for clients who are looking for online resources and multiple ATM locations. Community banks make more sense for people who prefer to walk into a bank to make deposits and withdrawals.

How many financial advisors do you currently employ? We have discovered that many of our Baby Boomer business owner clients who were raised by depression era parents have a distorted view of diversification. This viewpoint was formed from the set of values passed down to them from their parents. As youths, they were taught not to trust financial institutions. Thus, we have found many of our boomer clients diversify brokers more often than truly diversifying their portfolios.

Like banks, many broker dealers waive account fees once your relationship meets a certain asset threshold. You might also be entitled to a reduction of your investment advisory fees. These reductions may result in significant savings for the client. In addition to potential savings, you will most likely reduce redundancy with your investments when you work with one advisor as opposed to more than one advisor.

Think of your retirement plan as a new company for you to run as you enter retirement. You and your spouse are the co-owners or co-executive officers. A qualified financial advisor should take on the role of the family’s financial steward. The family’s financial steward should handle the day to day operations of the retirement plan. They are there to report back to the ownership or executives both good and bad news. They should be there to suggest adjustments when necessary. It typically does not make sense for there to be more than one family financial steward.

Do you believe that one of your current financial advisors has the qualifications to serve in such an important role? Many business owners who are preparing for retirement sometimes realize that the financial advisors that they have worked with pre-retirement need to be replaced so that their retirement plan can have a better chance to succeed going forward.

The financial services industry is in the midst of significant changes. The focus is shifting from products to advice. Old fashion stock brokers are going to struggle to justify their commissions in an information era. In the past, they had an “idea” that compelled a client to work with them. Their value add was information they provided. Today, information is only a click away. Today, financial advisors must evolve. If not, they run the risk of becoming a dinosaur.

A business owner’s financial situation is typically much more complex than a W2 wage earning client. It is imperative for a business owner to work with a financial advisor who has experience working with this type of client. Many business owners prefer to work with financial advisors who have attained the certified financial planner certification. Obtaining certification means someone has voluntarily taken the extra steps needed to provide the highest possible standard of financial planning to those they serve.

Consolidation under the right circumstances makes sense for a variety of reasons. Done correctly, it should make your financial life more simple and efficient.

Jim Marren is a certified financial plannenr with Reno Wealth Advisors, an independent firm with securities offered through Raymond James Financial Services Inc. Contact him at 775-321-6200 or


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