Ira and Mario had never done any financial planning. They never budgeted and felt hard-pressed to say how they spend their money. Their home was titled in Ira’s name, alone. And since being married, they had only opened a single joint checking account for household expenses. All other financial accounts were still owned individually.

On his accountant’s advice, Ira had created a business-sponsored retirement program but hadn’t started contributing to it yet. He’d been accumulating significant cash distributions from the business in a low-interest savings account because he didn’t know how to best invest it. Mario was paying down his student loans and contributing to his 401k account at work. Ira and Olivia were on the health insurance plan at Ira’s business; Mario was on his employer’s health plan. They wondered if this was the best setup for the family.

Ira had an attorney draft his will and a trust shortly after Olivia’s birth, but hadn’t looked at these documents since then. Mario had never contemplated having a will or other estate documents drafted by an attorney.

Both Ira and Mario were busy with their parenting and careers, leaving little time and energy to address these neglected, but critical planning gaps. As their questions stacked up, they started to feel overwhelmed. Their good friend suggested they needed financial guidance services from an expert planner.

Ira and Mario scheduled a complimentary Introduction Call with Mandala Financial Advisors. Ira and Mario shared their immediate concerns. We described how we guide people in situations similar to theirs using a comprehensive wealth planning process. We agreed that it felt like a good mutual fit and that we should advance to a deeper-dive Discovery Meeting.

In our Discovery Meeting we focused on gathering information and listening. We came to the meeting with questions across a wide range of topics for Ira and Mario to answer separately. We explained there are no right or wrong answers. We wanted to understand both Ira’s and Mario’s circumstances, dreams, and concerns. 

After the conversation, we organized and documented what we heard and sent our notes to Ira and Mario for their review. We included descriptions of the goals they had described, refining them over a few email exchanges.

We described how we would work with Ira and Mario to help them achieve their goals. Together, they decided to engage us by subscribing to our ongoing Full Service Model which provides both comprehensive financial planning services and sustainable investment management services.

Ira and Mario provided financial statements of their bank accounts, credit card accounts, retirement accounts, investment/brokerage accounts, student loans, mortgage, and auto loans. They also provided us copies of their most recent tax returns and copies of their employee benefit manuals. 

We provided Ira and Mario access to our financial planning portal where they used a tool to help them organize and estimate their monthly living expenses. We needed that information for our next meeting, Explore the Possibilities.

We had an independent research firm send Ira and Mario a risk tolerance questionnaire for them to complete separately. The results of this research helped us understand the appropriate level of investment risk to target when recommending an investment allocation for their respective retirement and taxable investment accounts.

We opened the meeting with an initial list of recommendations based on information we had already collected. These were centered on estate planning to protect the financial future of the family in case of catastrophe.

• Ira and Mario to select a family law attorney experienced in adoptions to usher their adoption petition through the state courts; we provided a short list of qualified family law attorneys at their request.
• Ira and Mario to contact Ira’s estate planning attorney who could review and update Ira’s existing estate documents (will, trust, powers of attorney) and arrange for similar documents to be drafted for Mario; we offered to review estate planning fundamentals with them prior to their attorney meeting.
• Ira and Mario to consider the person best able to serve as a guardian for Olivia should both of them die before she is an adult.
• Ira and Mario to review designated beneficiaries named on their respective life insurance and retirement investment accounts; they discovered their parents were still the named beneficiaries.
• Ira and Mario should create a separate cash reserve account to cover 6 months of living expenses should either Ira or Mario’s income be temporarily disrupted.
• We should review the adequacy of Ira’s life insurance coverage to cover future income potential from his business should he die prematurely.

Working together on the financial planning portal, we started by sharing a balance sheet consolidating their assets and liabilities. Ira and Mario’s net worth was more than they had anticipated. We explored various scenarios that measured the likelihood of their achieving their goals under assumptions for future income, expenses, and investment returns.

Ira’s business income presented the biggest wildcard as it varied significantly year-to-year. We evaluated additional scenarios that considered this variability in business income. During our discussion Ira disclosed he was thinking he would sell his business when he turned 60. We looked at how various proceeds from his business sale would impact their plan’s probability of success.

We presented an initial plan to Ira and Mario. Together, we settled upon the the following actions:

• Ira and Mario would open an in-state 529 plan for Olivia’s college expenses that offered broad investment options; Olivia’s grandparents would begin funding it.
• Mario would begin contributing the maximum amount allowed to his 401(k) to secure the full 5% employer match (i.e. never turn down free money!).
• Mario would pay down his student loans in our recommended order to minimize interest expense.
• Ira’s business would contribute to his retirement account at the maximum level the business can support.
• Ira and Mario would push out the purchase of the cabin for at least 3 years when their cash flow should support the additional mortgage and maintenance costs.
• Ira would work with us and his accountant to estimate the value of his business when he turns 60; we would integrate that value into future-dated cash flow.
• Ira and Mario would adopt our recommended investment asset allocation that provided the best likelihood of their achieving their financial goals, at a risk level that balances Ira’s high tolerance for risk with Mario’s more conservative investing nature.
• We would open a joint, taxable investment account to which both Ira and Mario would contribute savings that exceeded their retirement account limits; together we would chose ESG funds that aligned with their values of a more environmentally sound and socially just world and had a history of delivering superior financial returns.
• Ira would transfer his business retirement account to us for ongoing investment management.

In addition to these immediate actions, we also recommended Mario serve on the board of a land trust preserving natural spaces in the area they wish to buy the cabin. Ira, while he felt he didn’t have the time to commit to a board, said he would support Mario with funding to the nonprofit organization. We suggested Mario reach out to this employer’s community affairs group with a request for additional financial support.

 We all agreed to meet quarterly and reassess meeting frequency at the end of the first year. We would continue refining the financial plan for other topic areas identified on our service calendar, such as tax planning, insurance, and college saving. We would update the financial plan as Ira and Mario’s circumstances and goals change over time.

Along the journey we would provide Ira and Mario coaching on their financial habits, thereby increasing their financial wellness and likelihood of achieving their goals. We would continue to keep them educated and current on impact investing and ways for them to align their investments with their values.