Dr. James Sebring* is a 26-year-old second-year Orthopedic surgery resident. He has been married for two years, and his wife is four months pregnant. Several insurance salesmen have approached him about purchasing life insurance for his family. He is busy, and overwhelmed by the options and phone calls. He would like help making sure he has taken care of all of the basics, and that he is managing his finances for his future. They also would like to explore whether buying a home is a good decision for them.
Dr. James Sebring
- Age 26
- Orthopedic surgery resident
- Annual Income $42,000/year
- Completion of training: 3 years
- Likely starting salary: $375,000
- Partner salary: $525,000
- Age 26
- Stay-at-home Mom
- 4 months pregnant
- Educational Debt: $165,000
- Credit Card debt: $3,200
- Currently renting their home
- Investments: none
- Savings: $1,200
- No current life insurance, liability insurance, or estate planning
James’ & Melissa’s Concerns
- Purchasing life insurance for family protection
- Anxiety over their educational debt
- Should they buy a house now?
- Planning for his job after training
- What should they do with their savings and monthly surplus?
How We Helped Dr. and Mrs. Sebring
James and Melissa thought that they needed help deciding on the correct type and amount of life insurance to purchase for their upcoming family addition. At our initial meeting, we helped them understand that a more comprehensive approach to their situation would be a better option. They agreed and enrolled in our Young Professional Program. We gathered all of their financial and personal information, and set up a meeting to help them do the following:
- Price the appropriate amount and type of life insurance with an agent that would give them several estimates to choose from, and who would not try to sell them anything else
- We did an analysis that showed them that renting while in residency was a more sound financial decision for them. We also showed them the importance of building up a cash savings account so that they are prepared for a down payment when they buy a home when residency is finished. We will help them with calculations, decision-making and referral to a mortgage lender that will work with them when they are buying their home
- Set up a meeting with an estate attorney who is reasonably priced to do the basic estate planning that they need
- Referred them to an accountant who will do their annual state and federal tax returns
- Helped them price and purchase renter’s insurance and a personal liability umbrella to protect their risk
- Set up an investment account and a savings/emergency fund account
- Automated savings into these accounts to begin building their liquid assets
- Identified risk tolerance and asset mix for their investment policy
- Recommended that they delay starting a College Savings plan until he starts his practice
- Reassured them that their educational debt can be handled and paid off with a formal strategy once they have finished training
We will invest their monthly savings for them as per the Investment Policy Statement, and meet with them annually. When he is closer to finishing his residency we will meet to help them review contract options and help with the decision for their new house and mortgage. As they transition to their private full-time practice we hope that they will continue to be long-term clients as we help them save and invest to reach their goals.
*These case studies illustrate the hypothetical experiences of fictitious clients based on a common scenario our clients have experienced. These case studies are designed to generally illustrate how we may provide our services to our clients. Keeping in mind that no two clients, situations, or experiences are exactly alike, these case studies are not to be construed as an endorsement of the Firm by any of its past or current clients, nor any assurance that we may be able to help you achieve the same satisfactory results.