How One Client Saved $44,000+ Annually in Investment Costs

A recently retired client came to O’Keefe Stevens Advisory with substantial assets spread across five different financial advisory relationships. He was in a strong financial position, but the structure of his financial life had become fragmented, expensive, and difficult to coordinate.

One of the first things we did was determine what he was actually paying for his current investment management relationships. Until that point, no one had ever clearly laid it out for him. Each relationship had its own layers of cost, including advisory fees, account fees, fund expenses, sales charges, and other underlying investment costs, which made it difficult to understand what he was paying in total.

When we added everything together, his estimated annual investment-related costs were approximately $86,655, with some accounts carrying estimated total costs above 2% of the account value each year.

At the same time, there was no single strategy connecting his investments with his taxes, retirement income, insurance, charitable giving goals, and estate plan.

We knew there was an immediate opportunity for improvement. Our fee structure would reduce his investment costs by nearly 50%, but more importantly, he would know exactly what he was paying through one straightforward, all-encompassing fee while receiving a much more comprehensive level of financial planning and ongoing advice.

Key Takeaways

• Annual investment management costs were reduced by more than $44,000.
• Approximately $20,000 of annual insurance premiums were eliminated while maintaining similar coverage.
• A tax-conscious investment transition was developed around roughly $600,000 of unrealized gains.
• Social Security, Roth conversions, and future retirement distributions were coordinated as part of one plan.
• A donor-advised fund was incorporated into both the tax and estate planning strategy.
• We began working directly with the client’s estate attorney to address significant New York estate tax exposure and coordinate trusts, beneficiaries, charitable planning, and investment accounts.

The Problem: High Costs, No Coordinated Plan

The client had accumulated substantial wealth over the course of his career, but his assets were spread across several firms and product types. Different advisors were managing different pieces of the portfolio, and there was little to no coordination between them.

We found meaningful overlap in the investment holdings, accounts with total costs above 2%, and no clear strategy connecting the portfolio to the client’s long-term tax, retirement, or estate planning needs.

Between five advisory relationships, no one was looking at the whole picture.

How We Reduced His Investment Costs by More Than $44,000 Per Year

Across the client’s existing investment relationships, we estimated total annual investment-related costs of approximately $86,655. By consolidating the investment management relationship and restructuring the portfolio, we were able to reduce those ongoing costs by more than $44,000 per year.

The improvement went beyond cost. Rather than managing each account independently, we could now consider the tax treatment, purpose, liquidity needs, and expected timeline of each account as part of one broader investment and financial planning strategy.

The client also moved from multiple layers of expenses that were difficult, if not impossible to identify, to a fee structure that clearly outlines what he pays and what is included.

Transitioning the Portfolio Without Creating an Unnecessary Tax Bill

Consolidating the portfolio did not mean simply selling everything and starting over.

One taxable account contained approximately $600,000 of unrealized gains, so liquidating the portfolio all at once would have created a substantial and unnecessary tax liability.

Instead, we developed a gradual transition strategy, reviewing which investments should be retained, which could be sold strategically over time, and which highly appreciated positions could potentially be incorporated into the client’s charitable giving strategy.

This allowed us to improve the investment portfolio while remaining conscious of the tax cost required to get there.

Coordinating Retirement and Tax Decisions

Our financial planning process also allowed the client to evaluate decisions that had previously been handled separately or, in most cases, had never been modeled at all.

We evaluated different withdrawal strategies, Social Security timing, future Required Minimum Distributions, Roth conversion opportunities, a potential home purchase, and other scenarios to understand how each decision could affect not only his near-term financial flexibility, but also his long-term taxes, projected wealth, and eventual estate composition.

The goal of the relationship was not to manage investments, but to determine how those investments could most efficiently support his lifestyle, family, charitable goals, and long-term legacy.

Addressing New York Estate Tax Exposure

Estate planning became a major focus of our work after simplifying his account structure and lowering ongoing costs.

The client’s estate is well above the New York State estate tax threshold, but he previously did not have a coordinated strategy in place for managing that exposure.

We are now working directly with his estate planning attorney to review beneficiary designations, trusts, investment accounts, charitable goals, and estate documents as one coordinated team. The client no longer needs to act as a middleman, relaying information from one party to the next, hoping each detail was accurately represented. Instead, his financial advisor and estate attorney can work together as a team to make sure the different pieces of the plan support the same objectives.

Establishing a Donor-Advised Fund

Because the client is charitably inclined, we also recommended incorporating a donor-advised fund, or DAF, into his broader financial plan.

Rather than making charitable gifts with cash, we are evaluating contributions of highly appreciated securities from his taxable investment portfolio. This can potentially accomplish several objectives at once by helping him avoid realizing embedded capital gains on donated positions, generate a charitable deduction, transition out of investments that may no longer fit the portfolio, and gradually reduce the size of his taxable estate.

The donor-advised fund is also being coordinated with his estate attorney so that charitable giving is considered alongside the client’s broader estate strategy and his goal of leaving a substantial amount to his beneficiaries without unnecessarily crossing the New York estate tax threshold.

Eliminating Approximately $20,000 of Annual Insurance Premiums

Investment expenses were not the only high recurring cost we identified. The client was also paying approximately $20,000 per year for a life insurance and long-term care policy without having a clear understanding of the policy or whether the ongoing premiums were still necessary.

We connected him with a trusted insurance professional who could independently evaluate the existing coverage and determine whether the same protection could be structured more efficiently.

The review ultimately identified an alternative policy that maintained similar levels of coverage without requiring the same ongoing annual premium payments, creating another meaningful improvement in the client’s annual cash flow while preserving the protection he needed.

The Result: Lower Costs and a More Coordinated Financial Life

The measurable impact was significant. The client reduced his ongoing investment costs by more than $44,000 per year and eliminated approximately $20,000 of annual insurance premiums while maintaining similar levels of coverage.

More importantly, he went from several disconnected financial relationships to one coordinated financial plan. His investments, retirement income, taxes, insurance, charitable giving, and estate strategy are now being considered together, while his financial advisor, estate attorney, and other professionals can work toward the same objectives.

He also has something that was missing before – something with a value that cannot be quantified: clarity.

He understands what he owns, what and who he is paying, what his options are, and which areas of the plan still need to be refined over time. Rather than trying to coordinate several advisory relationships and make major financial decisions independently, he now has a roadmap and a team responsible for helping him stay the course.

That matters even more because we began working with him early in retirement, a time when his attention should be on his family, friends, passions, and enjoying the financial foundation he worked so hard to build, not on trying to piece together advice from multiple professionals.

The value of having the right team goes well beyond cost savings. There is real value in the confidence, time, and peace of mind that come from knowing someone is looking at the full picture, anticipating issues before they become problems, and providing proactive guidance when important decisions arise.

If we could put a dollar value on that feeling, I suspect it would be worth far more than $44,000.

Could Your Financial Plan Be More Coordinated?

For families with substantial assets, the biggest opportunities are often found in the connections between decisions.

Are your investment costs reasonable? Are your tax and investment strategies coordinated? Has someone evaluated your estate tax exposure? Are your beneficiary designations consistent with your estate plan? Are your insurance policies still appropriate and cost-effective?

If those decisions are being handled separately, there may be opportunities that no one is currently responsible for identifying.

At O’Keefe Stevens Advisory, our role is to bring those pieces together so clients can make better-informed decisions with greater clarity and confidence. Schedule time with me to discuss.

---