Your Retirement on Your Schedule

Pre-Retirement

You’re building savings, raising a family and paying college expenses. Your investment goal is long-term growth.

Employing our “GPS” Financial Model systematizes setting a measurable Goal, making a financial Plan, and keeping Score of your progress.

Post-Retirement

As you approach or enter retirement, securing a stable and consistent income becomes paramount. We're here to integrate your financial planning with essential tax and legal considerations, streamlining your retirement into a cohesive entity.

Making Retirement Visions Happen...

ProActive Advisors provides competent financial advice, personal planning, and investment management services to combat challenges to your financial security. Get help from ProActive Advisors to guide your financial decisions and take advantage of our time-tested investment management for greater certainty of success.

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Retirement Plans

Transferring your retirement savings from your former employer’s 401k or 403b Plan into a self-directed individual retirement plan (Traditional IRA or Roth) without tax consequences can often lower investment costs and provide greater investment choice. You can additionally get professional management of your account so you have greater peace of mind.

ProActive Advisors begins the rollover process for you by first guiding you through goals identification process to determine how best to invest to meet your income and growth needs. This process is informative and educational and results in customized retirement plan that considers your lifestyle not just your financial needs. The game plan being to sync your new life after work with your needs and purposes.

As of 12/31/21, there are now new beneficial tax-qualified plans for the gig economy’s needs that lower costs and provide benefits formerly available only to large company sponsored retirement plans. These new benefits provide a greater measure of flexibility and lower costs.

These plans allow for faster savings build-up permitting greater contribution amounts including salary deferral just like big company’s offer. They additionally can offer Roth contributions that you don’t receive a tax deduction for making but allow for you money to grow tax deferred inside the plan. Of course rules apply, but if you are self-employed these new plans can boost your savings and when combined with smart management can help you catch up savings not made earlier while targeting a comfortable retirement income.

Your financial professional at ProActive Advisors can help you learn the pros and cons of each type of plan like others are now doing to save and invest more tax-efficiently so your family can enjoy a better retirement. As a Fiduciary Advisor, we’ll look out for your interest and work to achieve the goals and objectives you require of a plan to meet your important retirement goals.

Recently, new beneficial rules governing qualified retirement plans for small business owners lower costs while providing enhanced benefits. Take advantage of these benefits like others are doing to have greater flexibility and significant improvement of outcomes.

As small business owners, we at ProActive Advisors have first-hand experience navigating the ins-and-outs of administrative burdens, plan costs, vesting, reporting requirements, and participant choice to qualify for safe harbor. Let us help you navigate this maze and implement the best plan to meet your small company’s needs. As your Fiduciary Advisor, we’ll collar the responsibility for investment choice and education so your liability as a plan sponsor is minimal.

As a public employee, you may receive a pension as part of your retirement benefits or you may choose to participate in other plans like a 457, 403b, or a TSP. There are often tiers of benefits based on your hire date and matches which may require your mandatory contributions. Rules to participate, rules for health plans, rules for survivor benefits, and rules with crediting factors, COLA, Social Security, and penalties for retiring early.

Many public sector employees are seeking professional help to navigate all the rules and make better retirement decisions. Why not call ProActive Advisors to evaluate what’s best for you and your family’s retirement security.

Going it alone or ignoring retirement planning can result in retirement shortfalls and “gotchas” that sole proprietors should avoid. Find out how to maximize benefits, better manage investments and potentially retire with greater retirement income.

Call on us for help. We are Fiduciary Advisors and work in your best interest. If you commit to a regular savings program we’ll help by lowering our fees while still offering the same high quality services all our clients enjoy.

Real life scenarios where ProActive made a difference.

Click to read their stories. Any sound familiar? Let Us Help!

Lifetime Income that Wasn't

A new client was referred to ProActive who owned two non-qualified variable annuities (VAR), a Traditional IRA, and an individual brokerage account. Both VARs appeared to have lifetime income riders but by examining the fine print we found one did not and the other VAR did but only if annuitized giving up any beneficiary residual value. She had owned the first VAR for 9.5 years and added $60,000 to it. The additional deposit restarted her surrender term for another seven years. The second VAR had been purchased with a one-time payment seventeen years earlier. The brokerage account was managed and held 12 mutual funds with internal fees averaging almost one percent. Seven of the 12 were Large Cap Blended funds, two were International funds and three were bond funds. The bonds funds average expense ratio was .50%.

In examining the client’s brokerage statement that listed the VARs, it showed a calculated monthly lifetime income amount but had a fine-print footnote disclosing that the income shown was not based on the IRS standard lifetime income tables but on a 15-year life expectancy. This inflated the expected actual income the amount the client thought they would receive for life. However, the footnote continued to further state that should the account value go to zero the lifetime income rider would terminate.

Examining the annuity prospectus about her lifetime income rider we discovered the client had a rider that provided her the option to take income without surrender penalties but no actual guarantee of lifetime income. She could still purchase an additional rider that would guarantee lifetime income at the cost of an additional .95%. We called the insurance company to confirm the rider she owned would indeed terminate if the combination of income withdrawals and a market loss zeroed-out her account - a clear and present risk if a 2000 or 2008 market correction occurred. We asked how much income the new guaranteed lifetime income rider would provide. They said it would guarantee 4% payout for life. Because she could pay herself the same 4.0% at no charge, even with zero growth of her account value over the next 25 years, she decided to terminate her contract, pay the ordinary income taxes and reinvest her proceeds using our Conservative Income portfolio strategy with a modest allocation for Growth. This lowered her investment costs to 1.0% annually and will potentially increase her long term future account value.

The second Variable Annuity required annuitization and had been invested 100% in a Global stock mutual fund for 17 years providing a below-average return largely due to it being burdened by high internal expenses of 3.7%. The lifetime income benefit of this VAR required giving up any residual beneficiary account balance upon her passing. Upon getting the insurance company’s calculation of guaranteed monthly income amount if annuitized, combined with there being no residual benefit to heirs and the high investment costs, she surrendered the contract taking the after-tax proceeds and reinvesting them in her managed account

the following year - done on our advice to spread her tax burden over two tax years.

Which Hat Are They Wearing?

Most Broker Dealers permit their Registered Representatives to also be registered as an Investment Advisor Representative (IAR) with their affiliated Investment Advisory firm. This dual licensing practice creates a potential conflict of interest because their brokers may sell clients commissionable products to receive greater up-front compensation. What apparently happened is the broker/advisor switched hats on the client at times acting as a Broker selling them investment products while at other times acting as an IAR selecting low-cost investments under a managed account fee arrangement without the client knowing what’s going on.

One brokerage firm client we provided a second opinion to was found to have four (4) accounts: two individual accounts: one invested in stocks charged management fees and one invested in mutual funds where she was charged commissions, a Roth IRA account invested in “C” share mutual funds with ongoing 1% annual commissions, and a Traditional IRA invested in low cost mutual funds and ETF's where she paid a management fee. The managed individual account valued @ $350,000 held almost seventy stocks to broadly diversify it using “a own a little-bit-of-everything” strategy. X-raying the mutual fund holdings indicated there was significant duplication in certain holdings and the expense ratios of the funds held afforded the opportunity to significantly lower her investment costs and potentially improve her bottom line.

The client had no knowledge or understanding why they had both commission-based and managed-fee accounts and confirmed they worked with only one financial advisor at the firm. Looking at several period statements there was little variance in trade activity justifying the account configuration other than compensation preferences. Excessive diversification of account holdings had lowered account returns since the best performing positions had diluted weights. The client transferred her accounts to be under our care using Pershing as custodian. We consolidated her two individual brokerage accounts into one managed account and properly diversified it to improve performance. We sold out her “C” share mutual funds lowering her investment costs by over 50% and invested the proceeds in low-cost index funds and ETF's. Gradually we restructured her individual account to minimize tax liabilities being careful not to adversely impact Social Security taxation and Medicare premiums. Proceeds were reinvested into a mix of 80% Growth and Income holdings consisting of high quality, dividend paying stocks with 20% Growth stocks overlaid with our pro-active risk management discipline. Less burdened by high internal costs and replacing an ‘own a little bit of everything’ strategy, the client has seen their accounts perform well and is less stressed about investing.

Why Two Account Custodians?

Frequently clients transferring their accounts from Brokerage firms that permit dual licensing as a Registered Representatives (Brokers) and Investment Advisor Representatives (IARs) have experienced potential conflicts of interests associated with compensation available to the advisor. A client coming from an independent Brokerage/IAR firm had two custodians for her deceased husband’s IRA. The second custodial account was a private trust company who specialized in holding private, non-traded real estate partnerships (REITS). The IRA account appeared to be split primarily to enable the purchase of the REIT.

A spouse inherited her husband’s IRA and was concerned because she didn’t feel her husband understood what he invested in and felt they should not have almost 40% of their money in a REIT but was assured by her broker that was not the case. A friend of hers suggested she call ProActive Advisors to get a second opinion.

After assessing her investment objectives as “Long Term Growth” with no need for Current Income and a willingness to assume market risk, we then reviewed her IRA account statements and holdings, including the REIT. She was invested in stocks except for the REIT which provided monthly income distributions. When reviewing the REIT’s annual statement, we discovered her capital account was being depleted by paying out dividends it didn’t earn. Fees and expenses were high, recently the dividend had been cut and the REIT sponsor had discontinued redemptions. We advised her to use the exception for death of a shareholder to request a redemption and helped her prepare her letter. As it turned out the Trust had put the REIT shares in her name, but the REIT had not which advantaged her to still make the request. However, the REIT instructed to her complete paperwork to make the transfer request and then denied her redemption request. After a second refusal to admit the transfer first request was improper advice given to her by the REIT we suggested the client obtain a securities attorney to represent her interests in resolving the matter.