Finding the right financial fit: Doreen Tucker had to fine-tune her portfolio to meet her goals.
Prior to working in human resources, Tucker worked in the financial field and admits that she always nurtured an interest in investing. After becoming the vice president of staffing for AXA Financial in New York City, she turned to the professionals at her own company to get the financial counseling she needed. In early 2003, she contacted Jaime Wright, a financial adviser with AXA Advisors, and was immediately impressed by his approach. Wright listened as she discussed her long- and short-term goals, then began crafting an investment portfolio that best met her needs. "I wanted to ensure that my daughter's college fund was in place and that my retirement plan was solid," Tucker recalls. "I needed someone to take me through all my options and guide me toward the best fit."
At the time, Tucker had three 401(k) accounts and some cash in her savings account. She had also maintained a mostly technology-based mutual fund with American Century for 10 years to which she contributed $150 monthly for her daughter and $100 monthly for herself. The fund performed well until the bottom fell out for technology stocks in 2000. By 2001, she had lost $20,000, leaving her with $60,000 to invest.
Wright thought Tucker an ideal client because she already knew the value of saving and did not have a lot of debt: "My goal was to use an asset allocation model based on her risk tolerance level so she could meet her goals but be comfortable in the process." Determining that Tucker had a moderate-to-aggressive risk tolerance level, Wright invested $90,000 from her three 401(k)s and $44,000 of the $60,000 she had in her mutual fired in a total portfolio comprised of 30% large-cap funds, 25% small- to mid-cap funds, 20% international stocks, 20% bonds, and 5% cash. "The $44,000 was invested in a 529 plan for her daughter's college education," Wright explains. "We used the Alliance Bernstein College Bound Fund, an AXA product that has a principal protection plan. It provides a guaranteed return, and we do dollar cost averaging from the principal protection plan to an age-based investment portfolio, so the structure shifts as her daughter gets older."
Wright then consolidated two of Tucker's 401(k) accounts into a traditional IRA. For the self-directed IRA, he compiled a list of stocks consistent with Tucker's goals from which she could choose. This allows her maximum latitude in selection because she makes all the choices for that particular IRA. "I just love to be involved in the process," says Tucker, who has bought shares in Washington Mutual (NYSE: WM) and Lucent Technologies (NYSE: LU).
Another benefit Tucker has enjoyed from Wright's guidance is the advice he has given her about estate planning. She has decided to make provisions for appointing a healthcare proxy and a power of attorney to ensure that her wealth is transferred properly when the time comes. "Jamie encouraged me to have a life insurance policy outside of the company that I work for, and I feel very secure now that I have done that," she says. Tucker has a variable life insurance policy with Equitable Life Insurance Co. that contains an investment option, giving her added flexibility to increase the value of the policy.
Surveying the distance she has traveled with Wright's assistance, Tucker says she is now a stronger believer in obtaining financial advice early. "I would tell anyone: Don't be afraid to invest and don't rely on next year's income because [you can't be] sure you'll have the same job," she counsels. "Look for ways to earn and save outside of your job if you want to have financial security."
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|Title Annotation:||Investment Strategies|
|Date:||May 1, 2004|
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