Suggestions from the experts?
Charging fees on a bond account? That's definately hosing the client.
On the commish needed to maintain a rolling ladder. Most of ours are barbelled with the longest shrt bonds in the 5 to 7 year range. Then we pick along the curve for something in the 18 to 25 year range on the long end. Don't respond on this point because every case is different, and we take the curve into account. Doing this, depending on what were trying to do, as much as 10% of the portfolio might roll every year. One a million dollar account total costs for the first year will range from just under one percent to just above, even though the long bonds may have as much as two points in them. That is how cheaply the short bonds are being purchased. However, the first year is the only time a commissioned account costs more than a .75 fee account. Year two on the commission account, with 10% of orig investment rolling yearly, would cost no more than the cost of adding a 5 to 7 year bond, 100K with 1 pt, about $1000. And that's it, so it goes every year. Even if that bond has 2pts, it wouldn't come close to the fee. Add in whatever crazy call or reinvest the income scenerios and I can't come up with any way it gets close to the $7500 a year that a million dollar fee account would generate. By year two the commish account is the clear winner from a client fee POV. Double the acquisition costs and it takes less than four years for the lines to cross. Why is this in debate?
Talking in your direction is a waste of time.
Given your limitations dpr, you’re probably correct.
I have a couple, both 50 yoa, who have $500k in non-qualified money they want to put away for 15 years to use in retirement. They have a very high income and don't want to pay additional taxes from their investments.
They say they don't anticipate needing this money between now and retirement, but they don't want to lose it--of course.
I've proposed a strategy to put a portion of the money into a 10-year fixed annuity--that will grow back to $500k upon maturity--and the other portion into a VA.
Any suggestions for a better way to handle this?
How much income are they expecting from these assets in retirement?