Case Studies

Scenario #1: Thriving business with employee pension plan

The business is a well-established local hotel with annual revenues of $6 million+ and just more than 60 employees. Most full-time staff are hourly (housekeepers, wait staff, maintenance, etc.) with 10 on salary. The hotel has been operating for about 20 years with several staff members considered long-term employees. The hotel offers partially paid health insurance and a 401(k)-like pension program that is just greater than $2 million.

Here's how Kock Financial helped:

Kock Financial conducted an independent review of the 401(k) currently offered to employees to determine a suitable type and plan design for the company. We researched a variety of providers to discover which had reliable service and appropriate investment options for the company. Testing and third-party administration were major considerations, as well as matching issues, safe harbor options, and profit sharing. Mutual fund companies, including those with no loads, were part of the mix, as well as a variety of insurance platforms.

Kock Financial also guided a discussion on the importance of group disability for the company's employees, which led to the discovery that the business had considerable exposure from employees injured on the job.

Scenario #2: Mature family nearing retirement

George Smith, 50, and his wife, Gwen, have three kids, Bill, 23; Lisa, 20; and Tommy, 17. Bill is in his second year of law school, and Lisa is a senior at the University of Wisconsin–Madison. Tommy is a senior in high school and expects to play football at a small division III state school next year. George and Gwen have a combined income of more than $85,000, and, besides their Westside home, they own a small cabin on Eagle Lake in the North Woods. Their total assets exceed $700,000.

For the past 20 years, George has been doing his own investing but has grown tired of the pressure involved. Although George can see retirement upon the horizon, he would consider himself a moderate to high risk taker. He and Gwen hope to retire in 10 years to a larger place in the North Woods.

Here's how Kock Financial helped:

Kock Financial conducted projections as they related to George and Gwen's retirement goals to determine where they stood in relation to their stated goals. We reviewed all of their asset allocations, including company 401(k)s, pension plans, social security, and IRAs, analyzing each investment vehicle as it related to their retirement goals. We also advised George and Gwen on the following:

  • The option of retiring before 59½ without incurring 10-percent tax penalties on qualified distributions*
  • Passive and active investments
  • Different styles of investments and alternative investment options, including commercial real estate as part of their portfolio
  • Enhanced indexing strategies to investing

*In conjunction with the clients' tax advisor

Scenario #3: Widow with children and insurance settlement

Tiffany Mays is a recent widow with two small children ages 3 and 5. Upon her husband's death, she received a life insurance settlement of $500,000, which is currently sitting in a money market earning 2.5 percent. Before her husband's death, Tiffany was a stay-at-home mom, which she hopes to continue. Tiffany, a college graduate, assumes about $210,000 in debt, including a $190,000 30-year fixed mortgage. Tiffany wants to continue to stay in her current home with her children, preparing for their futures.

Here's how Kock Financial helped:

First, Kock Financial was concerned about the difficulty of making important financial decisions so soon after her husband's death; however, it was decided that we should proceed in an advisory capacity. Due to Tiffany's immediate situation and desires, we made the following recommendations:

  • Pay off the $20,000 non-tax-deductible debt
  • Incorporate $50,000 into 529 plans for her children's college costs
  • Direct $400,000 into income-producing strategies to help supplement the family's current income needs
  • Keep $30,000 in liquid positions for current emergency needs

We assisted Tiffany in the claims process with the Social Security Administration to obtain survivor benefits for her family, advised her to update her will regarding beneficiary designations and power of attorney, and directed her to purchase personal life insurance to protect her children's futures. All of these recommendations were based upon the cash flow and flexibility needs of the client with the understanding that constant monitoring and adjusting would be necessary in the near term.

The preceding are hypothetical case studies and are for illustrative purposes only. Actual performance and results will vary. These studies do not represent actual clients but a hypothetical composite of various client experiences and issues. Any resemblance to actual people or situations is purely coincidental. These case studies do not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted.