The Bartiromo Effect from CNBC to FOX, Maria Bartiromo is the face of financial media by Advisors Magazine

ADVISORS

Issue 81

NOV 2017

magazine

maria bartiromo financial media maven

A Sandwich Generation

A full plate of financial concerns

Independent Consulting Few deliver what clients want

A Legacy Conversation

Financial and estate planning at crossroads

publishers note

ISSUE 81 | NOV 2017

Publisher Erwin E. Kantor Managing Editor Michael Gordon Editorial Robert Jordan Harold Gonzalez Samantha Jones Staff Writers Robert Jordan Judy Scinta Amy Armstrong Hadrian Scott Matthew D. Edward Andrea Lehner Martin Frost Christopher Parks Contributors & Guests Steven Selengut, IAR Vitaliy Katsenelson, CFA Ben Schrock, BFATM Illustrators Paul Kales Khalil Bendib Marketing / Advertising Sean Rome Billing

Eric Daniels For advertising inquiries, to order prints, contact: editorial@advisorsmagazine.com No part of The advisors Magazine may be reproduced or transmitted in any form of by any means, without prior written consent of the editor. Due to the nature of the printing process, images can be subject to a variation of up to 15 percent, therefore Advisors Magazine cannot be held responsible for such variation.

individuals are shaping america, not corporations.

elevision anchor Maria Bartiromo has earned her stripes as a major figure in financial and business news reporting. In this issue, learn some things you may not know about the tenacious journalist, and catch a glimpse of her recent interviews with President Trump and Vice President Pence on the GOP’s tax proposal. Her story begins on page 10. The financial and estate planning industries are at a crossroads. Eroding trust is one of many challenges that make it all the more difficult for advisors to acquire and retain clients and gain assets under management. Dennis Stack and Tom Cormier offer their perspective on page 7. Also in this issue of “Advisors Magazine” we focus on new and emerging financial trends as a result of a tumultuous economic climate along with market history highs; and on page 16, we serve up a taste of what the “sandwich generation” deals with in America – that is, people in their 30s to 60s caring for aging parents while supporting their grown children. One thing is for certain, entrepreneurs have the power to define each moment as a new epoch. Over the last ten years, we’ve been proud to give voice to those entrepreneurs who launched ideas

that changed the way people approach business and finance. No matter your specialty, whether you’re a small or medium-sized business, public or private, there is always some insight to be gained from each other. How we define a generation is no longer in the hands of corporations and unions. We, as individuals, are shaping this country. It’s reassuring to know that entrepreneurs are optimistic about the future and what’s to come. As is our custom then, in this issue, we also continue to profile innovative entrepreneurs who are the source of new jobs and inspiration. They play a vital role in our economy, and we look forward to reporting on the uplifting stories of 2018, as well as those stories that need to be told.

Enjoy the Issue,

Erwin Kantor Erwin Kantor, Publisher

nov 2017 CONTENTS COVER STORY

digital issue

Maria Bartiromo builds on her media portfolio adding her third financial news show currently airing on FOX network channels. “Wall Street Week,” a weekly primetime investing program debuted last April.

ADVISORS

Issue 81

NOV 2017

magazine

maria bartiromo

earning her stripes

A Leagcy Conversation

Financial and Estate Planning at Crossroads

Independent Consutling

What Consultants Deliver, Every Client wants

Sandwich Generation

A Full Plate of Financial Concerns

07 a legacy

WHAT FEW CONSULTANTS DELIVER THAT EVERY CLIENT WANTS

conversation

advisors must have to succeed in the great wealth migration The financial and estate planning industries are at a crossroads

ON THE MENU FOR THE SANDWICH GENERATION A full plate of financial concerns

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TEACHING CLIENTS WHAT FIDUCIARY MEANS

STAY INVESTED FOR LONG-TERM FINANCIAL SECURITY

business / finance

CUTTING THROUGH THE CLUTTER

SOCIAL SECURITY EDUCATION

FINANCE CAN CHANGE LIVES

WILLINGNESS TO EDUCATE CLIENTS

PERSONAL EXPERIENCES RAISES ADVISORS AWERENESS OF THE UNKNOWN

32 42 Each Retirement Plan Needs its Own Road Map Hope for the best; plan for the future

45 Understanding the Plight of Seniors in Transition

38 EDUCATE, EDUCATE, EDUCATE

58 Helping Clients Take Control Defining fiduciary one client at a time

Seniors ageing and becoming less independent

47 Fiduciary Rule Presents Quandary for Advisors The DOLs fiduciary rule holds everyone accountable

48 Long-Term Growth, Short Term Debt Forecasted growth in 2018, M&A insdustry

50 Social Security Education Lays Groundwork Social Security isn’t going broke by the time your retire

52 Social Investing Still Requires Business Sense Taking a different approach helping babyboomers

54 Forging Strong Relationships

Continuing education for wise advisors achieving success

56 Sound Priorites Guide Financial Planning Acquiring knowledge combined with great listening skills

ADVISORS MAGAZINE - NOV p.5

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by dennis stack and tom cormier

A LEGACY CONVERSATION

advisors must have to succeed in the great wealth migration Opportunity Lost and Found

he financial and estate planning industries are at a crossroads. Eroding trust is one of many challenges that make it all the more difficult for Advisors to acquire and retain clients and gain assets under management. This comes at a time when the greatest transfer of wealth from one generation to the next is thought to produce a significant growth opportunity. However, because the human element has been largely ignored in the past, the exact the opposite is playing out. ADVISORS MAGAZINE - NOV p.7

Fortunately, Advisors can seize a rare opportunity to alter the course by having a meaningful legacy conversation with clients and prospects.

HEIRS GET THE ‘CAKE’ BUT NEED THE ‘RECIPE’

hen Financial Advisors and Estate Planners ask clients what they want to accomplish with their wealth, the response often reflects their

why. “We want to make sure that our kids and grandkids don’t have to walk the same rough path that we had to.” Or in a similar sentiment, “We want to make a difference in the lives of our family for generations to come.” The nobility of these assertions is evident but the reality is that far too many succession plans fail. While there are structural / organizational reasons for failure, the overwhelming cause is through failings in human nature. When the professional Advisor’s focus is solely on building and preserving financial assets to pass on the cake to heirs, the recipe to create the wealth is often lost. And when wealth is divorced from the wisdom that created it, the net result is waste. Advisors not only have a fiduciary responsibility to bring this to the attention of their clients but it can greatly affect the future success of their business. FIND A NEED AND FILL IT While Advisors possess the skills and resources to manage client assets, acquiring new clients is becoming increasingly difficult due to fierce competition and the growth of robo-advisors commoditizing the investment advisory business. The solution lies in the old adage, ‘find a need and fill it.’ To acquire new clients, advisors need to differentiate

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themselves in competitive landscapes, and retain clients by strengthening relationships. Coincidently, clients overwhelmingly want a solution to pass down their wisdom along with their wealth, which presents a unique opportunity. A 2012 Allianz Pulse Survey asked Baby Boomers to rank priorities when passing down an inheritance, and measured their on a scale from 1-100%. By significant margin the results show a much greater desire to pass down their values than their valuables. Passing down their family history and stories ranked highest with a score of 86%, while in sharp contrast leaving a financial legacy ranked lowest in priority at only 10%. Regardless of this lopsided preference, very few Boomers have made provisions for passing on their wisdom and life experiences with their will or estate plan, primarily due to lack of awareness, resources and professional guidance. What they need is a trusted Advisor to initiate a legacy conversation, and there is nobody better suited for this than the Advisor entrusted with their financial legacy. THE ‘FAMILY’ LEGACY CONVERSATION Historically, advisors have typically failed to include the matriarch and heirs when discussing the client’s financial affairs. This could help explain why 98% of heirs will fire their parent’s advisors after receiving an inheritance, according to PriceWaterhouseCooper Global Private

Banking/Wealth Management Survey in 2011. Many advisors are already losing clients at an alarming rate as the great wealth transfer accelerates, and the pace of attrition is only going to increase. This issue is gaining recognition within the financial services community along with the search for effective solutions. The topic was featured in a TED Talk by top 100 Advisor, Shari Burnum, at the 2016 Raymond James Advisor Development Conference. Introducing the concept of holistic financial planning to elite advisors, Ms. Burnum explained why advisors must change the conversation or risk losing future business. It is not hard to see that Advisors who don’t start engaging in a ‘legacy conversation’ may soon find themselves left out of the conversation altogether. The good news is that Advisors can distinguish themselves by being the first among competitors to introduce prospects and clients to the concept of holistic financial or estate planning, and retain more of their clients when life transitions occur. After years of building a book of business Advisors are faced with the prospect of losing up to 98% of their company value and as much as 98% of their income along the way. Establishing a trusted relationship with the family’s matriarch and heirs increases the likelihood that Advisors can survive this emerging trend. A survey of 1,000+ investors conducted by MFS Investment Management in 2013 found that 75% of clients said their children had never even met their Financial Advisors. By simply inviting the matriarch and heirs to participate in a legacy conversation, Advisors establish themselves as the ‘family advisor’ vs. the ‘money guy’, creating an emotional bond that can lead to increased loyalty and generate more referrals Making the family aware of the wisdom and life lessons that are in their midst and helping them start their own legacy conversation is a gift that keeps on giving, one that can make the Family Advisor nearly irreplaceable. BENEFITS OF LEGACY CONVERSATIONS Building a comprehensive legacy portfolio requires more than a single meeting. Continuing the legacy conversation beyond the introduction can exponentially enrich, expand and grow a solid client base. Patriarchs have accumulated a library of life experiences but the matriarch and heirs can also contribute a wealth of their own perspectives that are valuable to building the family’s legacy assets. Once family members get a sense of their personal history in the initial conversation they’ll realize the importance of investing time to build the family legacy….together. Whether with the client alone or with different family members, Advisors can set a regularly scheduled time to continue the legacy conversation, much like the book, Tuesdays with Morrie, and offer to record the sessions for posterity with a simple digital voice recorder or mobile app. The value added to existing services by conducting these sessions is

immeasurable yet requires little time for each meeting, where other business can be discussed. In most cases, these sessions can easily bolt on to whatever meetings are already planned or arranged. The benefits for offering regular legacy conversations cannot be overstated and include opportunities to: • meet with clients more frequently without talking only about the money • discuss changes in the family dynamic and offer solutions • deepen relationships where Financial Advisors become Family Advisors • meet extended family as they are brought into the legacy conversation • meet business partners, associates and colleagues who may become clients • generate high quality referrals as the family becomes more engaged with their own legacy • generate fee-based revenue for facilitating the sessions with simple packages.

CONCLUSION

The Allianz Survey confirms that Boomers want to pass down their family history and stories, and they need a trusted Advisor to guide them. In the midst of all this tumult, a level of trust can be earned by demonstrating that a client’s wealth is about more than just the money. It’s also helping them understand that their life lessons and values are the glue that binds the generations of the family. If ever there was a fortuitous time to start the legacy conversation, this is it! FOR MORE INFORMATION ON HOW TO START A PRODUCTIVE LEGACY CONVERSATION WITH CLIENTS CONTACT: DENNIS STACK - 480-760-1924 dennis@LegacyStories.org

Percentage of Boomers Ranking Importance of Inheritance Priorities Life lessons and values

77%

Family history and and stories

86%

Keepsakes and heirlooms

34%

Financial assets

10% Allianz Academy of Legacies Survey ADVISORS MAGAZINE - NOV p.9

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reported by jude scinta

the BARTIROMO Effect

From CNBC to FOX,

Maria Bartiromo is the face of financial media FOX Business News journalist Maria Bartiromo interviews the heavy hitters in finance, business, and politics. In November, she spoke with Vice President Pence on her show “Sunday Morning Futures,” and just one month prior, President Trump sat with her for a two-part series on tax reform, healthcare, and other pressing issues on the minds of Americans.

Bartiromo’s work in the financial media sector since the mid1990’s has earned her two Emmys and a Gracie Award; the latter recognizes “exemplary programming created by women, for women and about women” in media and entertainment. As a proven broadcasting pro, she’s calm, cool, and collected when paired with government and industry elites. But if you want to see Bartiromo come undone, watch a YouTube video of her 2004 CNBC interview with legendary entertainer Prince. Nearing the end of the segment, Prince asks Bartiromo to sing one of his songs while he plays the guitar. She giggles, she’s flustered, and undeniably star-struck as she tells him, “I’m sorry…I wimped out, I’m afraid because I don’t have a voice…” Prince, who’s enjoying watching her squirm, starts to cluck like a chicken mocking her sudden stage fright. Laughing at his taunt, she tells him, “…I’m sitting here with the genius of all music

and you’re asking me to sing.” That’s probably the only time Maria Bartiromo “wimped out” on camera. In 1995, she was the first television reporter to broadcast live from the floor of the New York Stock Exchange (NYSE) as part of CNBC’s innovative and bold move to what is now a familiar financial reporting venue. It was Bartiromo – a woman – who was front and center in a space and an industry dominated by men. Did she care? Well, during one broadcast Bartiromo turns to a man standing too close for comfort and tells him, “Excuse me, we are on live on TV, could you just get out the way for a second? Thank you.” “When I first got down to the floor of the New York Stock Exchange, I was a little intimidated, a little overwhelmed, but I am aggressive. I consider myself strong, so I …persevered,” said Bartiromo in a 1999 CNBC report. “We felt that if we had a camera right in the thick of things and me handicapping everything as it was happening that it would be, in some ways, demystifying investing,” she said,

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explaining the intent of the live platform. Often dubbed “the face of CNBC,” Bartiromo spent 20 years at the cable news network pioneering such shows as “Squawk Box,” “The Closing Bell with Maria Bartiromo;” and the nationally syndicated “On the Money with Maria Bartiromo.” But she shocked the financial media world in 2014 when it was leaked by “Drudge Report” that she was leaving CNBC and joining Fox Business News (FBN) as their global markets editor. The “Business Insider” reported that there were three primary reasons for her departure: money, visibility, and “the opportunity to, once again, help build something.” If Bartiromo was looking for more visibility at FOX, she got it when she and Neil Cavuto served as moderators of FBN’s first and second Republican presidential primary debates in November 2015 and January 2016, respectively. FOX reported that

the debates were the highest-rated programs in the network’s history according to Nielsen Media Research. Currently, Bartiromo anchors FBN’s “Mornings with Maria” and her new gig, “Wall Street Week,” a weekly primetime investing program. She also crosses over to FOX News Channel to host “Sunday Morning Futures,” and in October, Bartiromo interviewed President Trump on his proposed tax plan where he emphasized his perception of the plan and what it means for Americans. “…I call it tax cuts. It is tax reform also, but I call

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it tax cuts. It’ll be the biggest cuts ever in the history of this country,” he told her, a statement that made headlines throughout the U.S. and abroad. On the November 5 edition of “Sunday Morning Futures,” Vice President Mike Pence was interviewed by Bartiromo echoing support for the GOP tax reform plan, and she pressed him on whether there is room for compromise. “Even your own party is saying this does not reflect Republican principles of tax cutters?” she said to Pence. “Well, there’s always room for compromise. But what the president is not going to compromise is his determination to see this Congress pass historic tax cuts and pass them this year. And, the president is also absolutely committed … to

make sure, as he says, that this is a middle- class miracle. That the majority of the tax relief benefits working families and working Americans, and benefits businesses that can create jobs for working Americans. We know that the details will be worked out as this legislation goes forward” said Pence in predicting what ADVISORS MAGAZINE - NOV p.13

the American people can expect, and adding that, “While upperincome Americans probably stay where they’re at, at the end of the day we want to see middle-class Americans benefit and we want to see businesses and job creators … be able to benefit and create jobs and make the kind of investments that will grow our economy.” Presidents Obama, Bush, and Clinton have also been interviewed by Bartiromo as she mounted success after success during her 25-plus year career ranking her as a media powerhouse in the financial industry. In October, she spoke at the Future Investment Initiative, what’s being called a “landmark investment conference” in Saudi Arabia. She moderated a panel discussion on breakthroughs in artificial intelligence, robotics, and big data with high-profile participants including Masayoshi Son, Chairman and CEO of Softbank Group. She also led a discussion with Peter Thiel, founder of Palantir Technologies and PayPal, Inc. Shifting the spotlight back to pop culture, there’s another Bartiromo moment immortalized in Americana – besides her flirtatious fun with Prince – that her devoted followers may know about, but might come as news to some others. Joey Ramone, the front man of the Queens punk rock band, The Ramones wrote a song titled, “Maria Bartiromo,” prior to his death in 2001. The unlikely friends had a great mutual respect for one another. “Most people don’t know that Joey Ramone was an avid and smart investor,” said Bartiromo in an interview reflecting back on her friendship with Ramone that began when he started emailing her with comments and questions relating to the day’s financial industry news that she discussed on her shows.

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Perhaps the last stanza of Ramone’s lyrics best captures the essence of the Bartiromo effect: “I watch her at the big board every single day While she´s reporting you best stay out of her way I watch her every day I watch her every night She´s really outta sight”

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On the menu for the Sandwich Generation:

a full plate of financial concerns by amy armstrong

quished between meeting the needs of aging parents and coping with the demands of boomerang children, the current members of the “sandwich generation” – folks who are in their mid-40s to mid-60s – have become a challenging demographic for today’s financial advisor to effectively serve. Details of the situations that many people in this life-stage find themselves in are the stuff economic nightmares are made of. Their parents are living longer thanks to medical advances but aren’t necessarily prepared financially for the draining cost of in-home or long-term residential care. Simultaneously, the children of the sandwich generation are landing back in the family nest. Yes, some are victims of an unstable economy and unable to make ends meet on their own, but some are also casualties of their “instant gratification” generation trademarked by impatience with the traditional concept that years of consistent hard work lead to the rewards of a nice home and the latest model car. “Flat out, the issues faced by our clients in the ‘sandwich generation’ are some of the toughest,” said Larry Welder, owner of Granite Financial Solutions, LLC, with offices located in Georgia, Iowa and Texas. He notes that as “sandwichers” watch their parents enter the geriatric years, their awareness of their own pending aging become impossible to ignore. Yet, “no one wants to believe they are going to get old. Right now, they feel invincible, but when you start to talk about retirement and aging and the problems with our Medicare system, people get frightened and overwhelmed.” The struggle is real. Or to put it in more sandwichfriendly terms – this is no baloney. The issues on the full plates of the sandwich generation are more like one of those monstrously-long party subs stuffed with so many different types of deli meat and cheese that it is nearly impossible to enjoy.

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issues such as:

grandparents

Cracking down on Mom and Pop’s poor driving skills – even having to be the one to take away their driver’s license or worse yet, sell their vehicle.

The endless phone calls from parents with dementia or Alzheimer’s Disease not yet in full-time care who become increasingly confused and need verbal direction and reassurance numerous times each day.

parents

Disagreement with adult children as to how they should spend their paychecks now that they are back under their parent’s roof.

Worries that elderly parents will lock themselves out of the house on a cold winter night or that grown children will bring “undesirables” home after hours.

children

Johnny or Susie move back in to the basement due to a job loss or a divorce – sometimes with their significant other or their children.

sandwich generation The list could go on and on and mostly centers on variations of financial worry and health concerns. It leaves members of the sandwich generation feeling more like a thin piece of baloney slapped between two pieces of nutrient-void white bread and jammed into a kid’s lunch

box mushed between the thermos full of apple juice and the fruit snacks. According to the Pew Research Center, one in eight Americans between ages 40 and 60 is raising a child and caring for an elderly parent at the same time. ADVISORS MAGAZINE - NOV p.17

In reality, the existence of the sandwich generation isn’t a new phenomenon – multi-generational relationships have always been part of the human experience. The difference today – especially in Western societies; particularly in the United States – is that multi-generational living just isn’t something we really do anymore. Mom and Dad live in their home; we live in ours. Our children are supposed to leave the nest and build their own. Yet, more and more as a sagging economy infringes on that dream, three generations – each with their own life viewpoint – end up together under one roof and often in conflict. p.18

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“It is a hindrance to the way we live,” Michael Hall, owner and president of Hall Financial Group, LLC, based in Eau Claire, Wisconsin, said. “In other cultures, the parents are taken in, no questions asked. That is just the way it is. But not in the United

States. We do not want to be inconvenienced in this way.” He is speaking of trends he sees, not his own personal viewpoint. His father died just 18 months into his retirement leaving his mother penniless because he had not understood the importance of a pension. Hall took care of his mother, but he has seen just the opposite occur far too often. “Long-term care most certainly is the greatest fright of anyone that is aging,” Hall said. “We work and save and save our entire lives and then only to have it wiped out because of medical care.” It leaves the question of what steps can a financial advisor encourage clients to take when they find themselves pinched between their parents and their kids? Create Your Own Safety Net Sooner Than Later Across the board, financial advisors agree that current longterm care plans are simply far too expensive. Yet, the sooner one buys into a plan – in other words “the younger” one buys into a plan, the better. Wait until age 60 to buy in to a plan and expect to pay a higher premium. “So many people that come to me wanting to know about longterm care are usually coming to me too late to buy a long-term

care policy at a reasonable rate that is going to be a good value for them,” Ronald Ray, CEO of Turning 65 Solutions Tax and Insurance based in San Antonio, Texas, said. Noting that government programs offered to pay for longterm care require a significant divesture of personal assets to qualify, Ray recommends the use of life insurance policies or fixed annuities with long-term care riders as a way to leverage personal assets against the astronomical cost that often drains a retiree’s savings. Set Funds Aside for Health Care Only This idea comes from Bryan Burkhart, president of Burkhart Investment Group based in Morgan Hill, California. At age 48, his wife had a hemitropic stroke. She was paralyzed on her right side. She needed constant, 24-hour care. She faced a year of recovery that involved eight-hour physical therapy days five days a week. And Bryan wasn’t ready financially for this. Now, he encourages his clients to establish a personal health care fund – monies derived from a market portfolio conservatively set up for this purpose only – for when the unthinkable happens. Engage the Uncomfortable Conversation It might not be the most fun you’ve ever had with your parents, but an honest talk regarding what financial plans they have made and what expectations they have of you is certainly in order if you are a member of the sandwich generation.

So says Rita Cheng, a certified financial planner and chief executive of Blue Ocean Global Wealth based in based in Gaithersburg, Maryland in an interview with CNBC. “It’s important to talk about financial things, but allow your parents some space,” Cheng said. “You don’t need to be completely involved in their business, because they still want to be independent and in charge. But ultimately, if they want to be in charge of how they are cared for, they need to be proactive and plan for it.” Inflation-Proof Your Savings The power of inflation against your money is the silent killer of many financial plans. “Far too many people have not taken inflation into consideration when planning,” Alicia Smith, co-founder Layman Lewis Financial Group based in Loveland, Colorado, said. “Inflation is not going away. It is going to happen to your account whether you prepare for it or not.” Smith notes recent studies documenting that healthcare costs required by an average geriatric patient doubles every 23 years. That means that a person in their 40’s ought to plan that their healthcare at age 65 will cost them twice what it does today. Hedging a portion of one’s investment portfolio in acknowledgement of this mathematical fact is something she advises. Closing Thoughts: Encourage Clients to Take Care of Their Own Health The National Center on Caregiving based in San Francisco,

California, notes that as many as 50 percent of “sandwichers” report experiencing depression and neglecting their own physical health leading to higher rates of cardiovascular conditions, diabetes, high blood pressure and weakened immune systems. Financial advisors seeking a holistic approach to client care can easily incorporate health-related questions and updates in regular client meetings. Simply asking, “how is your health?” may not suffice. Carolyn McClanahan of Life Planning Partners, Inc. based in Jacksonville, Florida, suggests starting with this: “Tell me what you do to take care of your health.” It is a loaded question, but it may spur on a lengthy discussion a “sandwicher” client ought to have with a professional who can help him or her set boundaries and prioritize.

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by merilee kern, mba

What Few Consultants Deliver

That Every Client Wants

he promise of independent consulting is fast cars, big checks, and total flexibility to pick and choose clients, and it’s a promise hundreds of thousands of “ex” workers chase every year. Exexecutives, ex-employees, and ex-bigname-consultants are flooding the ranks of independent consultants thanks to the recession and “jobless recovery.” This gold rush mentality is understandable given that U.S. businesses spend an astounding $120+ billion on management consultants each year—and six times that amount on other advisors such as IT specialists, R&D companies, lawyers, and accountants. Hundreds of thousands of consultants are employed in firms ranging from “single-shingle” shops to global, megaconsultancies. But, even in a trade that’s rife with profit potential, actually earning that pot of gold can be extraordinarily difficult given there are two-plus million consultants, coaches, trainers, and similar professionals all fighting to find clients, win projects and make a living. Roughly half of these consultants are solo practitioners or in boutique firms—and the sad reality is most boutique consulting firms are perpetually six months away from bankruptcy. Their “new business procurement” engine sputters along unreliably, resulting in a persistent struggle to grow larger, while solo consultants capture average annual revenue under $70,000 (compared to $250,000 per consultant across the entire industry). To explore this disconnect, I connected with David A. Fields, author of “The Executive’s Guide to Consultants,” and the soon-to-be-released follow-up title, “The Irresistible Consultant’s Guide to Winning Clients.” Himself a multi-milliondollar earning independent consultant, this “expert’s expert” has some sage advice on how people can realize success in the consulting trade—a profession, he

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concedes, that can be “as problematic as it is profitable.” Since Fields has coached hundreds of successful consultants and other independent practitioners around the world on how to “make it rain,” I asked him the obvious question: “Why do so many struggle in this field?” Quite unequivocally, he asserted that too many consultants—the majority, in fact—are completely missing the mark with respect to their baseline approach and overarching mindset.

To help give independent consultants a clearer path to that coveted yet elusive goal of financial freedom through what “could” be a lifestyle-friendly career, here are six of Fields’ pragmatic, eye-opening tips: Tip 1: Think Right-Side Up. Fields urges what he calls “Right-Side Up” thinking that boils down to a simple idea: Consulting isn’t about you, it’s about them—the clients. Like many “obvious” philosophies, Right-Side Up thinking is far easier to say than to put into practice. Consultants tend to make consulting about

themselves—it’s evident in their marketing materials, their pitches, even their approach to projects. Consultants who are thinking Right-Side Up use their client’s preferred communication method (phone? email? text?) and style, not their own. Their proposals focus on the client’s problem and outcome, not the consultant’s methodology. Their marketing materials speak about their clients’ issues, situations, and aspirations, not what makes the consultant great. They even turn down projects if that would be in the best interest of the client.

Tip 2: Maximize Impact. Fields contends that most consultants— particularly boutique firms—who don’t have enough clients believe they have a visibility problem; i.e., not enough prospects know about them. In fact, most of those consultants have an impact problem. They’re in front of enough prospects, but those prospects don’t care about what the consultant is offering. In contrast, successful consultants know how to “fish where the fish are,” which means they focus their firms on issues clients are aware

of and urgently want to solve. Amazingly, many consultants offer solutions the consultants think are important, without ever checking the market need. For instance, a consulting company might be trained in category management, however, it may fare better by shifting the firm’s focus to market expansion if that’s the primary issue their clients want to address. Tip 3: Build Visibility. Once you have impact, Fields says visibility is critical. More awareness leads to more prospects, more clients, and more revenue. It’s as easy and linear as that. To achieve this, there are five specific "Marketing Musts" a consultant should employ, which have proven most effective for winning clients. They are: Writing, Speaking, Trade Associations, Digital Presence and Networking. Surprisingly, Fields suggests the quest to differentiate, which is a mainstay of marketing, is a

misguided effort for consulting firms. According to Fields, “Clients aren’t looking for different. They’re looking for reliable, credible solutions to their problems.” Tip 4: Connect, Connect, Connect. Since relationships are the engine that powers consulting firms, Fields exhorts consultants to drop the sales orientation and focus on creating, nurturing and leveraging relationships. In fact, Fields promotes an unusual definition of wealth—that wealth = relationship strength. He counters the common requests consultants use to try to

garner introductions, “Who do you know who could use my services?” (a gambit that rarely works well), with a more effective alternative: “Who’s the most interesting person you’ve talked to in the past couple of months?” This removes the awkwardness factor associated with asking for contacts while also taking the pressure off the person receiving the request. Other effective strategies Fields suggests to create new relationships include "walking the halls," which is literally introducing yourself to nearby decision makers; setting up internal meetings at the client's location; and setting up interviews as research for a thought leadership piece. Additionally, he reminds consultants to make their visibility-building efforts interactive. For instance, when giving a speech, Fields suggests asking listeners to write down their response to a question, then asking members of the audience to stand up when you describe the response matching what they wrote. Of course, rather than dashing off after the speech, the consultant should stick around and talk with those who want to learn more. Tip 5: Become the Obvious Choice. Fields believes the “trick to becoming the consultant that clients value above all others” can be summarized in a single word: discovery. Through the process of discovery, the would-be irresistible consultant learns the client’s desires, hopes, requirements, and fears better than any competitor— perhaps better than the client himself. He suggests using a carefully constructed “Context Discussion” with power questions that build trust and uncover crucial information. For instance, Fields even encourages consultants to ask questions that might scare lesser-caliber professionals, such as, “What concerns do you have about bringing in an outsider like us? Do you have any worries about that?” Tip 6: Propose, Negotiate & Close. While winning clients is the result of hard work and diligence, even consultants who follow the first five tips often fail to “seal the deal.” To spur greater success

closing deals, Fields suggests building a “story” that compels clients to sign on the dotted line, and proffering combinations of approaches, terms and fees that are highly tailored to resonate with each particular prospect. Fees are frequently a point of contention and, when objections to fees arise, Fields recommends a tactic he calls the “strategic delay.” Rather than offering one of the common responses to fee objections (defensively justifying the fee or weakly reducing scope), a consultant using the strategic delay acknowledges the fee objection then asks, “what else?” to surface other concerns and trepidations. By soliciting all opposition points before addressing any, the consultant avoids becoming defensive and can tackle the objections from easiest-to-hardest. This builds the time, trust and momentum needed to effectively combat fee objections. Clearly in a profession with so much upside, many seek to garner success working as a consultant or other type of independent practitioner. Perhaps best exemplifying the lack of business development prowess in this profession was the last thought Fields conveyed in our exchange—that a great number of consultants fail at the most fundamental, yet mission-critical, final step in the sales process: actually asking for the business. Here professionals need to foil that fear of rejection and go for it. If you don’t ask you don’t get, it’s just that simple. Branding, business and entrepreneurship success pundit, Merilee Kern, MBA, is an influential media voice and lauded communications strategist. As the Executive Editor and Producer of "The Luxe List International News Syndicate,” she’s a revered consumer product trends expert and travel industry voice of authority who spotlights noteworthy marketplace change makers, movers and shakers. Merilee may be reached online at www.TheLuxeList.com. Follow her on Twitter here: http://twitter.com/ LuxeListEditor and Facebook here: www. Facebook.com/TheLuxeList. Sources: https://www.census.gov/data/tables/2014/ econ/susb/2014-susb-annual.html http://amcf.org/index.php?option=com_ content&view=article&id=37&Itemid=102

ADVISORS MAGAZINE - NOV p.21

by matthew edward

Exclusive interview done by ABC’s TV “Secret Millionaire” – James Malinchak (l) with Philip Guske (r)

TEACHING CLIENTS WHAT FIDUCIARY

MEANS TO THEIR INVESMENTS

T Philip Guske delivers a seminar on income tax reduction and estate tax elimination held in Rockford, IL

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ADVISORS MAGAZINE - NOV 2017

he bold print giveth and the fine print taketh away. It’s a bit of truthful sarcasm often repeated by professionals within the financial services industry when describing the usefulness of those phone-book sized prospectus documents outlining the legalities of 401(k) accounts and other savings-oriented vehicles. “It is something my dad always said,” quips Philip A. Guske, CFP® president and CEO of Pathfinder Wealth Management, Inc., based in Rockford, Illinois. “We have lawyers writing all of this information that could be fascinating to me and others within the financial services industry, but the general public does not care. Most of the time, they just are going to throw it in the trash can anyway. They are not going to read through a 100-page booklet. That is going to be a nightmare for them.” Recent surveys back up Guske’s point that long, drawn-out legal documents don’t help investment consumers better under-

stand the fees they pay, or the reasons for those fees. A 2012 survey by the Insured Retirement Institute documented that 95 percent of investors want shorter prospectuses with a clear, straightforward statement of fees. Of those 95 percent, the bulk indicated the most recent prospectus they were given was far too long and required far too much time to identify fees. Only 17 percent indicated they had read the full document. Ninety percent said they never looked at the prospectus again after the initial purchase. In Guske’s view, it is the job of the financial advisor to break down and simplify what is contained in a prospectus. “These documents can be helpful, but it truly is not the fault of the public that they do not fully understand something that, unfortunately, many in the financial services industry themselves do not fully understand. It is up to the advisor to tell people; to tell clients what is truly going on in their investments, and to facilitate more education

Guske speaks to retired business owners, executives and professionals on how to reduce income taxes on your IRA, 401(k), and pension.

for consumers,” Guske said, adding that “the approach to client education within the financial services industry needs be transformed.” Guske isn’t seeking to turn clients into financial services experts – that’s his job. But he is working toward teaching them “a few of the right things,” that enable clients to ask informed questions and be assured their decision-making process is properly guided. It is where his role as a true fiduciary begins. Since the U.S. Department of Labor’s action to require all financial advisors to act as fiduciaries has gained attention in the media, Guske said more of his clients have asked questions of him regarding the definition of a fiduciary and how he applies that to his practice. “The term fiduciary is becoming more wellknown,” he said, adding that he welcomes the questions because they open the door for him to further explain that his role is to identify investment options that are in the best interest of each client, versus pushing for a client to purchase particular products. Guske believes that the financial services industry has a lot of ground to still cover in educating the general public – and the industry’s clients – about what a fiduciary is and how a fiduciary must conduct their business. Again, a recent survey backs up Guske’s viewpoint. A 2014 report by the Betterment for Business organization highlighting the results of

answers given by 1,000 401(k) contributors described as long-term investors in their employer’s sponsored plan showed that 42 percent of those investors could not accurately define the role of a fiduciary or what they as a consumer should expect from a fiduciary. “We are on a mission to change that within our industry, and to help people better understand where they are at the start of their journey toward financial security, and also understand how they are going to get to where they want to be,” Guske said. He likens the path to financial security to doing a Google search on the internet regarding any topic. “You are going to get at least two or three different answers,” he said. “My job is to present those to the client and guide them to make an intelligent educated decision on which path to pursue.” His clients – the bulk of whom have $750,000 or more in assets – are people who have experienced a degree of success in their own chosen profession. But that doesn’t mean they don’t need help framing the big picture and sorting out the details of their financial lives. “Just because you are brilliant in one area of business does not mean that you are going to be or even should be expected to be brilliant in your finances or in your wealth management,” he said. “It is kind of like an athlete. Just because an athlete is a super star in one sport does

not mean he or she will be in all sports. Look at Michael Jordan. He is amazing in basketball, yet, he tried other sports and did not do so well. He was only brilliant in one. The same concept applies to finances.” Learn more about Philip A. Guske, CFP® and Pathfinder Wealth Management, Inc., online at www.pathfinderwealth.com

ADVISORS MAGAZINE - NOV p.23

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by amy armstrong

STAY INVESTED FOR LONG-TERM FINANCIAL SECURITY Telling investors not to panic and stay invested in the market is an easy thing to say, yet, it’s a significantly more difficult thing for investors to do – especially if they believe some media reports that the market is “crashing.”

et, staying invested is exactly what investment professionals like Richard Evans, principal of Richard L. Evans Investment Management recommends. In fact, he emphatically stresses to the firm’s clients that the market isn’t crashing as much as it is going through a normal cycle. “The biggest problem (that) investors – and most advisors make – is selling out when markets decline. They panic. I want to stay invested and keep buying when the markets are declining, so that we have more shares when the market recovers,” Evans explained. Recovery statistics after the 2008 Great Recession – which saw a mass exodus of investors from the market – show, nearly a decade later, the rewards for staying in the market, even as the natural human “fight or flight” response urged people to exit during that time. For example, an average investor with $10,000 in the American S&P 500 in January 2007 would see that amount drop to $5,800 by March 2009 when the bulk of the exit occurred. Leaving that $10,000 invested would have

shown the average investor growth to $17,000 by the end of 2014, according to economic calculators factoring market responses during that time period. In fact, investing in a downturn often transforms into a significant increase when the market is up. If the same investor had added $10,000 at the end of March 2009 to the original $10,000 from January 2007, the value of his or her investment would have increased to $46,000. “My clients want their money to grow safely over time,” Evans said. “We are not so much numbers as we are risk management. We do not advertise any performance numbers, as I do not want to attract any clients who want performance. When the markets are advancing, fine, but our emphasis is risk management on the downside. My clients want to sleep at night. They want to see their portfolios advance over a complete market cycle, which they do.” Evans views ETFs and index funds as the biggest problem in today’s financial world. He labels them as “fads” and fool’s gold sold by stockbrokers whose first priority is not of a fiduciary nature. He sees them as high risk in portfolios; risk that does not aid an investor in reaching financial security goals, as they will only precipitate short-term selling.

“I believe in risk management above all, and place risk management above performance goals,” Evans said. “I construct portfolios so investors do not panic.” Richard L. Evans Investment Management, LLC is an independent, registered investment advisory firm based in Flossmoor, Illinois. Learn more about Richard L. Evans Investment Management, LLC online at www. rlevansinvestmentmanagement.com.

ADVISORS MAGAZINE SEPT p.25

by martin frost

INVESTORS NEED TO CUT

THROUGH THE CLUTTER

nvestors need to cut through the “clutter” and avoid falling for the “next big thing” or fad investment, and instead stick to tried-and-true strategies that align with their financial goals.

he proliferation of new financial tools and investment products has diversified the market, but that increase in choice comes with a downside. “That makes [the market] very cluttered,” said Kiah M. Jordan (MSSE, CFP©, ChFC©), founder and impact strategist of Impact First Financial, LLC. “There needs to be a level of advisors that can step up, in a way, to create more transparency and remove some of the clutter and process for clients to understand what they’re getting.” Impact First Financial, LLC, is a Santa Barbara-based firm that coordinates investment services— across legal, investments, accounting, and insurance— for families and provides asset management and investment oversight, financial coaching, and financial planning for clients. The firm also provides other support services such as social impact investing advice, Jordan said. The firm maintains a $500,000 annual income, and net assets of $10 million, minimum to invest. Impact First Financial, LLC, does not invest money

p.28

directly, but rather coordinates the attorneys, insurance brokers, and investment managers that a complex estate can employ, ensuring that all the moving parts are kept informed of investors’ goals. To do that, the firm needs to know clients’ needs and work with them to set personalized financial plans that align to their goals and, more importantly, their

ADVISORS MAGAZINE - NOV 2017

values. “Money and finances are just a tool that people use to achieve other purposes,” Jordan told The Suit Magazine during a recent interview. “Engaging them around the values they have is the best way I’ve found to talk about money.” Jordan described the wealth management industry as changing, with the old-school of approach of throwing money at financial problems fading away. The industry’s explosion of products and information also presents new challenges for investors and managers alike. “The idea that the smarter and more expensive investment manager is the right way to go is I think going away,” he said. “People can get really overwhelmed by all of the information that’s coming in, and nobody wants to be doing it wrong.”

Clients approach financial professionals “expecting them to do what [the client] can’t do,” Jordan said. But to properly serve those clients, especially when they have multimillion dollar estates and complex finances, advisors need to put the clients’ interests first. Impact First Financial, LLC, acts as a fiduciary for clients, meaning investor interests come before commissions. The fiduciary standard allows Impact First Financial, LLC, to tell clients that, even if the going gets tough, the firm is there to help them achieve their financial goals. For Jordan, it all comes down to answering honestly when the client asks, “What would you do if you were me?” For more information www.impactfirstfinancial.com

by amy armstrong

FINANCE

CAN CHANGE

by matthew edward

Lives, one neighborhood at a time

Financial literacy can mean the difference between working from paycheck to paycheck, and building real, lasting wealth. But schools, community organizations, and even parents often fall short when it comes to providing effective financial education. In his corner of Illinois, Jeffrey R. Secord, CFP®, CAP® is trying to change that.

p.30 p.30 ADVISORS ADVISORSMAGAZINE MAGAZINE- -SEPT NOV2017 2017

ecord’s firm, IPI Wealth Management, Inc., has taken an educator’s mindset beyond their office and into the community. Secord was involved in a collaboration of offering financial literacy programs to women recently released from prison. The program, managed by a local YWCA, allows women reintegrating into society a chance to learn the tools needed to take charge of their financial futures. “If we can change one life, and one life takes it back to their neighbourhood, then we start to change the whole world. We believe that sort of education can be empowering for people from all walks of life.” Jeff and his team have created a movement called Women’s Financial Empowerment Initiative geared towards educating women from all circumstances to make a difference locally and one day, around the world. IPI Wealth Management, based in Decatur, Illinois, provides comprehensive financial planning and wealth management services. “We focus our individual wealth management process on client relationships that generate at least $2,500 of revenue annually but through our education initiatives we touch people from all levels of our economic spectrum,” says Secord during an “Advisor Magazine” recent interview. Financial literacy issues present wealth managers with a serious challenge. Few clients come equipped to understand their financial situation and the products available to them.

Secord said that Illinois is in the beginning stages of offering finance education as part of larger social wellness program, but the public school system still lags in preparing students for their financial futures. That said, the schools in Illinois are implementing financial readiness curricula, which is more than some other states can say, Secord added. IPI Wealth Management also offers a financial literacy program targeted to children, with a takehome savings kit. Secord noted that parents often mistakenly believe they need to wait until their children grow older before teaching them how money works. He, however, recommends starting as young as four years old.

Financial literacy aside, investors need to take an active role in managing their money. As the financial industry moves away from one-sizefits all allocation strategies and the single-minded pursuit of “alpha” gives way to a philosophy emphasizing customized solutions, investors and their advisors must work closely to stay on track. And, for Secord, clients who understand that investing as a two-way street are a must. “We’re looking for a planning engagement … Looking for people who are open and transparent,” Secord said. “If they just say, ‘What can you do for me? How much money can you make for me?’ then that’s usually a bad fit.” Savvy, modern investors need to be

active participants in achieving their financial goals, and advisors must be prepared to step in as educators to give those clients the tools they need to make informed decisions about their money. IPI Wealth Management engages prospective clients in long conversations about their goals and financial knowledge before any planning begins, Secord said. “We view ourselves as educators before we start managing money or doing financial planning,” Secord said, adding that a good initial conversation is one in which the other person does “90 percent of the talking.” IPI Wealth Management does not stop at educating clients, Secord and his team continually work to improve

their own knowledge as well. In recent years, the new millennial generation has begun accumulating wealth, and Secord has worked to understand these up-and-coming investors. Millennials, Secord said, want more than financial returns, they want to see their money create positive impact and go to companies that behave sustainably — and the repercussions of that can be felt anywhere in the market. “The more that people understand what is going on, the more they’ll understand that sustainability issues are going to matter not only when it comes to picking individual stock investments but mutual funds that adhere to a higher level of social responsibility criteria,” he said. But many millennials are not yet ready to participate in the financial world. Many struggle with heavy student loan burdens, often moving back in with their parents — who may already be financially strained taking care of older relatives. These millennials are in a difficult position, and pulling them out has become complicated due to the changing nature of work. The solution to this, Secord said, is to emphasize the value of long-term thinking. “The failure that people have is that they don’t think long-term enough,” he said. “If we can get people thinking in 30-year chunks, then they’re going to be more successful at imagining the future.” For more information see:

207 W Jefferson Street Ste. 101 Bloomington, IL 61761 Office: 3095850909 www.ipibn.com

ADVISORS MAGAZINE - SEPT NOV p.31 p.31

by frost bymartin scott hardin

CUT THROUGH THE CLUTTER

personal experience raises

advisor’s awareness of the unknown He thought he had addressed every “what if” scenario that could arise as he started his own firm.

B After all, he was a registered investment advisor – a fiduciary’s fiduciary; an advisor dedicated to putting all of his knowledge and skills to work for the best interest of the client.

ryan Burkhart was transitioning from working for another registered investment advisory firm to establishing his own investment advisory practice as the president of Burkhart Investment Group based in Morgan Hill, California which offers investment advisory services through Global Retirement Partners, a registered investment advisor. He knew that all of the angles had to be covered, reconfigured and covered again. And then the unthinkable – the thing he often warned his own clients about – happened to him. More specifically, it happened to his wife. At age 48, she had a hemorrhagic stroke. She was paralyzed on her right side. She needed constant, 24-hour care. She faced a year of recovery that involved eight hours a day of physical therapy five days a week. That wasn’t in his plans for opening Burkhart Investment Group. “I had planned meticulously to open a new firm. I had set aside the correct amount of money. I had planned what I thought would be every worse-case scenario, but it didn’t even come close,” Burkhart said. What his wife’s situation did do was significantly raise his awareness that he needed to know more about his clients’ lives than just what is happening in their bank accounts. Not only did

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he need to know – he wanted to know – what was happening in their lives beyond the dollars and cents. He quickly transitioned from merely creating portfolios that created retirement funding to an advisor taking a much more comprehensive approach. “It made me realize that I had to focus on every aspect of everything going on in the client’s life,” Burkhart said. “I had to focus on not just the financial portfolios but also focus on what to do – as their fiduciary – for their health care, life insurance, long-term care, disability insurance and care of their loved ones. I wanted to get more involved. It caused me to completely rethink the relationship I have with clients.” That included ramping up what was already a rather progressive approach toward teaching clients the true meaning of fiduciary. Recent moves by the federal Department of Labor to enforce a blanket-style fiduciary standard across the financial services industry added to this prompt. A recent meeting in which Burkhart and another financial advisor representing a brokerdealer firm made pitches to run a company’s 401K plan only further highlights his concerns that clients might not

fully understand the meaning of fiduciary. “I gave a detailed explanation of the fiduciary responsibility, and the other advisor said he would offer the same level of oversight but I knew he was prohibited by his employer to do such,” Burkhart said. “There is still a marketing spin to the word fiduciary. What is important is to dig even deeper now to help clients become fully aware of what that means. It comes down to who is willing to put it in writing and define what it means to be a fiduciary.” Learn more about Bryan Burkhart and his firm, Burkhart Investment Group, online at http://www.burkhartig. com/p/who-we-are.

Learn more about Bryan Burkhart and his firm, Burkhart Investment Group, online at www.burkhartig.com

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SOCIAL SECURITY EDUCATION CREATES PRUDENT RETIREMENT PLANNING by amy armstrong

essons learned through his parents’ misfortune planted the seed that grew in to a career in financial services. Michael Hall, owner and president of Hall Financial Group, LLC, based in Eau Claire, Wisconsin, talks openly about the fact that his father died just 18 months in to his hard-earned retirement leaving his mother with no pension benefits. “He was uninformed about pension options,” Hall said. Because of his family’s experience, Hall added, “retirement planning has always been on my radar.” Improving the financial education of his clients and others that may take the workshops offered by his firm is a major professional goal for Hall. The best use of social security benefits is a headliner topic for many of the workshops. The Hall Financial Group’s website unabashedly lists what, in Hall’s viewpoint, are the top five questions regarding social security that each person should ask to determine how to best maximize benefits. Hall not only recognizes the confusion that most folks have regarding social security; he understands it from an empathic view seeking to empower those he educates.

“It is a hot topic right now. As it should be,” he said. But knowing the best option for use of social security benefits requires understanding how the other retirement planning options such as

IRA’s, 401(k), etc., work best with social security, he said. “Are you better off to pull money out of an IRA if you want to retire at age 62 and leave the social security to grow at a little better interest rate than what the bank currently presents?” he asks. Sometimes yes. Sometimes no, he answers. But it is a question well worth exploring the answer to considering the fact that, “your Social Security benefit will increase for each year that you defer.” Care and education of women investors – especially widows – is also a paramount concern

for Hall. He knows women tend to outlive their spouses, but also in most cases have less retirement savings available to them because they were the primary caregiver for children and or aging parents rather than being the bread winner. “They’ve been out of the work force for much of their lives. They have less Social Security and less pension benefits available to them,” he said, noting that he sees the guidance of women investors as an area in which the financial services industry ought to improve its performance. “Education is paramount.” Read more about Michael Hall and the Hall Financial Group, LLC, online at: http://hallfinancialgroupllc.com

Securities and investment advisory services are offered through Gradient Securities, LLC (Arden Hills, MN 866-991-1539). Member FINRA/SIPC. Gradient Securities, LLC (a SEC Registered Investment Advisor) offers investment advisory services under the d.b.a. of Gradient Wealth Management. Gradient Securities, LLC and its advisors do not render tax, legal, or accounting advice. Insurance products and services are offered through Hall Financial Group, LLC. Hall Financial Group, LLC is not affiliated with Gradient Securities, LLC. Gradient Securities, LLC and Hall Financial Group, LLC are not affiliated with the Social Security Administration or any government agency.

by amy armstrong

WILLINGNESS TO EDUCATE CLIENTS

Creating Wealth and Building opportunities

As efforts by the federal Department of Labor to create a uniform fiduciary standard make their way through the financial services industry, predictions of smaller accounts being abandoned by advisors that can no longer service them are becoming a reality.

he Insured Retirement Institute reported in July 2017 – just one month after the new definition was implemented – that more than 150,000 accounts have been “dumped” by advisors. Other reports that came out this fall estimated close to 700,000 accounts are now orphans. This trend bothers registered investment advisors such as Ron Medley, the senior portfolio manager for Moloney Securities Asset Management based in Manchester, Missouri whose goal is to provide true fiduciary-style financial guidance to those sincerely seeking it. “The fear that smaller account holders would be orphaned is coming true,” Medley said. The definition of the word “orphan” paints a destitute picture of one left without care or guidance. In the financial service world, orphan means an account holder who cannot access the level of expertise that is necessary to make educated

choices. And, it is something Medley does not want to see within his industry. He recognizes the business model in which advisors whose only goal is profitability will opt to set firm minimums. That isn’t for him. “When anybody has an interest in becoming more educated regarding their finances and is looking for a way forward, I personally welcome that person as a client,” Medley said. “Whether that person is 20 years old with $1,000 to get started or a 40-year-old with a million or someone that just inherited a large sum, there is always an open door for the person who is trying to move themselves forward.” Education is the key to his business practice, Medley explained. He recognizes how overwhelming delving in to the world of financial jargon can be for those without background and training. It is one of the reasons he does business by the financial industry’s version of, “how long does it take to eat an

elephant?” The sarcastic common sense answer is, “one bite at a time.” It translates well to the financial services world: How many decisions does it take to create a secure financial future? Just one at a time, Medley said. “I work to break it in to manageable chunks,” Medley said. “When dealing with the complicated issues such as estate planning and retirement planning, it is best to make one decision at a time.” His best advice to clients is something he strives to follow: As you begin to experience success and as you reach yet another level of success, always surround yourself with people that have expertise that you do not have. Continue to learn. Read more about Ron Medley and Moloney Securities Asset Management online at: www.msam.net

ADVISORS MAGAZINE - NOV p.35

by amy armstrong

Educate, Educate, Educate...

and Then Advise

Be an educator first; be a financial advisor second. That is the mantra of Larry Welder, owner of Granite Financial Solutions, LLC, with offices located in Iowa and Georgia and GFS Financial Solutions, LLC in Texas.

is philosophy of educating first, works since more than twothirds of Americans cannot pass a basic financial literacy test. According to the annual National Capability Study produced by the FINRA Foundation, American financial literacy continues to decline significantly since the 2008 Great Recession despite the numerous economic lessons it so painfully presented to investors. In 2009, 42 percent of Americans tested could pass a basic financial literacy test. By 2016, that number dropped to 37 percent. “We promote financial literacy for all ages,” Welder said. “I found out early on in my career in financial services that while

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ADVISORS MAGAZINE - NOV 2017

meeting with clients, the conversation always leads back to the discussion that they do not feel they have the necessary financial education needed to meet life’s challenges.” Skills such as creating a budget, preparing a basic tax return, or understanding the principle of compound interest are ones Welder discovers many clients do not have when they come to his practice. While most people – especially Millennials – no longer have traditional checkbooks, he notes, the skill of being able to track and verify expenses versus income each month remains important for overall financial health. And, yet, many

Americans are incapable of performing this task that should be completed on a monthly basis. Granite Financial Solutions designed a financial literacy curriculum that Welder presents to college students. The curriculum was developed at the urging of his client, Dr. Cormac T. O’Sullivan, Program Director for the Nurse Anesthesia program at the University of Iowa. He doesn’t use the platform to promote his firm’s services, but instead views it as community service and hopefully a wake-up call for attendees that financial education is just as important as training in other subjects. Ideally, he would like to see financial education beginning as early as preschool. “Children can – and should – learn the basics of money and how to use it. We cannot start too young,” Welder said, adding that much of his own financial education began later in life. He spent the first half of his career as

Serving Our Military! To all our military clients, family and friends, we appreciate your service to our country. Please allow us the opportunity to serve and continue to serve you by helping you achieve your financial goals.

a general commercial contractor building churches, hospitals and schools. His undergraduate degree in civil engineering served him well in that venue and he not only understood, but regularly used, many numeric concepts. But not many of the financial ones. He was just as lost as some of his incoming clients are today, regarding retirement planning, investment options, saving for his children’s college, etc. For Welder, his financial education began after meeting his wife, Karen Welder whom has always worked in the financial services industry. Today, the two work side-by-side at Granite helping clients work towards securing their financial futures. “It is one of the main reasons I bought in to this business,” he said. “In my days when I was a contractor, I was that uninformed investor not knowing what to do or what decisions to make. I hated being that uninformed investor, getting no help from my 401k company advisor. So when I started meeting with clients, I wanted to make sure they became educated clients. We take great pride in providing financial literacy for our clients.” Today, he focuses on working with medical clients, both military and civilian, many of which are young families. Most often, he does not charge them a planning fee, as he is uncomfortable asking for

payment, while at the same time advising the client to put more money away to help meet their financial goals. “They do not have thousands of dollars to invest – especially when they start out,” Welder said. “Yet they need financial advice. When I meet with them, I see on their faces that they are thankful they have someone such as us to sit in front of and get the answers and strategies they need to make their plans reality.” Comprehensive planning is his approach. He sees that too much of the financial services industry remains more focused on transactional planning – the selling of products as answers to financial challenges – versus all-inclusive planning that considers how various products such as 401K plans, insurances such as disability, life and long-term care, and investments in retirement plans work better together rather than separately. It all comes back to the concept of education. Welder believes focusing on client education regarding the strategies his firm uses to help secure their financial future and how the products chosen can work towards achieving their goals is the foundation for his firm’s success. He believes a more educated client is more likely to implement suggested strategies and remain on track. In the end, it is the client’s success that drives Welder. “In the construction industry, it certainly was nice to see a completed building,” Welder said. “But what I have found in the financial services industry working with families and individuals to see them reach out and accomplish their goals is much more rewarding.” Learn more about Granite Financial Solutions, LLC, online at www.gfsinvest.com Securities (and investment advisory services) are offered solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC. AIC, Granite Financial Solutions, LLC, GFS Financial Solutions, LLC, and Advisors Magazine are not affiliated. Additional products and services may be available through Larry Welder, Granite Financial Solutions, LLC, or GFS Financial Solutions, LLC that are not offered through AIC. Representatives of AIC do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation. LWelder@ gfsinvest.com

ADVISORS MAGAZINE - NOV p.39

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by amy armstrong

Each Retirement Plan

NEEDS ITS OWN ROAD MAP Hope for the best; plan for the future.

hen the years of planning for your retirement transform into the years of actually living out your retirement, expect reality to be somewhere in the middle. All the best laid plans of mice, men, and financial advisors can easily be derailed by market fluctuations, increased inflation rates, and the marvel of modern medicine that has created longevity rates that previous generations only dreamed of. “The question on everyone’s mind is will they have enough money to last to 100,” Alicia Lewis said. As founder of Layman Lewis Financial Group based in Loveland, Colorado, she hears the longevity concern loud and clear from clients in nearly every conversation. “No one wants to be 95 and flat-broke busted.” A 2017 Sightlines Project study of 1.2 million Americans by Stanford University’s Center on Longevity highlights the concerns Lewis references. The project documented that three out of four Americans surveyed indicated they would like to live to or past the age of 100 if that could be done in good health with p.42

financial security. That’s the trick, Lewis said. The ensuring of financial security isn’t nearly as simple as answering a survey question. It takes planning, and it takes flexibility. “The plans that we put together for our clients are very flexible because life happens and we have got to be flexible within our plan, and so we talk, talk, talk to people about this,” Lewis said. “It is like when you go on a road trip. You have your roadmap, you have your snacks, and you have figured out where to stop for restroom breaks but then, boom, you get on the road and it is closed and then you are going to have to take a detour.” Her planning philosophy relies on the notion of under-promising and overdelivering. Lewis does not allow her clients to rely on upper-end market returns. Rather, she steers them toward planning for conservative returns that guarantee the meeting of their needs and leave room for gravy on the top should returns in excess of expectation occur. To Lewis, financial planning is as unique as each

ADVISORS MAGAZINE - NOV 2017

client is. “Everyone is different,” she said. “We look at each client individually and figure out what they need within their plan to meet their goals and then go about finding those products and/or services that we believe will help them accomplish their goals. Then we bring those to them and explain to our client why we believe this is the best option.” Doing this is part of what Lewis considers to be her fiduciary duty to clients. It’s

a mantra she used since the beginning of her practice and is part of why she isn’t favorably impressed by last June’s move by the federal Department of Labor to introduce new fiduciary standards by which all financial advisors must abide. She said it is laughable that it took an act of Congress to get a certain element of advisors within the financial services industry to disclose what fees they are charging client.

“One thing that has always frustrated me about the financial industry is that not all have been forthright with clients regarding what is going on within their portfolios,” Lewis said, adding that she welcomes the notion that advisors must fully disclose fees to clients. “But now for every advisor to say that he or she is a fiduciary – I do not think that is a true statement, especially if you are working for a company and are limited to working within a menu of

products and investments.” Lewis is a straight shooter. She will tell her clients the financial information they might not want to hear; she will address the touchy subjects, such as how much health care will cost in one’s golden years, or the often unpopular option of saving money to make larger purchases rather than adding the price tag to a credit card. People’s tendency to avoid financial issues comes as no surprise to Lewis. Between

the day-in and day-out stream of negative economic information broadcast through various media sources and the confusing jargon associated with the financial service industry, Lewis understands why clients might put their heads in the sand. “I think it is the responsibility of advisors to explain to clients what is in the fine print,” Lewis said. “We as advisors need to show them the ‘why’ with the ‘what’ of financial planning and the

details of the prospectus that come along with tools we use to create their retirement plan. We need to explain it in terms such as, ‘we are doing this to accomplish this,’ and ‘this benefits you in this way,’ and ‘this is how it fits in to your plan; into your personal roadmap.’” Learn more about Alicia Lewis and Layman Lewis Financial Group online at www.laymanlewis.com

ADVISORS MAGAZINE - NOV p.43

Look closely at nickel stainless steels and you'll see both their brilliance and their beauty. But nickel's role in sustaining our planet is also well worth looking at. Most importantly, nickel in all its forms is recyclable. Beyond that, nickel improves the corrosion resistance of alloys like stainless steels. This means less maintenance and less expensive rehabilitation. And nickel's strength and ductility make it ideal for creating super alloys for turbines that burn biogases-from landfills, for example-to generate electricity. Nickel also helps to reduce green house gas emissions in many ways hybrid cars use nickel metal hydride batteries; waste-to-energy plants use corrosion-resistant nickel alloys for a long, maintenance-free operating life; and wind turbines use nickel alloy casting because they perform so well under cold operating conditions. Nickel. Take a closer look. You'll see so much more.

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THE SUIT MAGAZINE - MAY 2017

by martin frost

understanding the plight of seniors in transition

alone. “If that’s the case then the senior can deteriorate from a health standpoint very fast,” he said. Steele has worked with many families and investors to plan their retirement so that they can gracefully transition into their golden years without running out of money. At the heart of his philosophy is a focus on what happens to clients’ money after they accumulate wealth. Steele Capital Management uses a “house approach” in caring for clients’ money, with the foundation being income, the walls standing in for accumulation of wealth, and the roof symbolizing insurance and asset protection. It’s the third phase that many advisors neglect, Steele said. “The conversation is always about that accumulation dollar,” he said. “More time is needed to help identify client objectives, concerns, client ways to mitigate risk.” As seniors age and become less independent and in need of assistance, Mitigating risk – a skill Steele picked up their adult children often face the difficult choice of whether to hire a home after years in commercial lending – incaregiver, or to even move their parents into a managed care facility. cludes defensive measures such as insurance and guaranteed income, he said. A t’s a difficult decision the home and the kids initiate care in the proper mitigation plan can prevent clients to make, and one home or move them to a facility and it’s from running out of money, and prepare that the elders often not mom and dad’s idea, then they tend them for unexpected events such as a resist. to resent the caregivers, they resent the death or the need for long-term care. “It’s usually a pride facilities.” “If you have sufficient income, as long issue … Making that Steele Capital Management, based in the as there’s not a huge financial need, then transition, it really needs to be their deciSeattle area, offers financial and retirement continuing to take things off your portsion,” said Aaron Steele, financial planner planning services to clients who are lookfolio without diluting the portfolio, that and owner of Steele Capital Management, ing for help in achieving their financial tends to be the case with retirees who who has advised many families grappling goals later in life. make it work,” Steele said. with this issue. “It needs to come from Steele told “Advisors Magazine” during mom and dad that they made this decision a recent interview that a forced transition For more information see to sell that house. If they’re not safe in can leave elders feeling hopeless and www.steelecap.net

YOUR FINANCIAL FREEDOM IS OUR SINGULAR GOAL Steele Capital Management. All rights reserved 2017. Investment advisory services offered through BWM Advisory, LLC (www.BWM. Investments). Independent producer of insurance services offered through Insurance Marketing Organizations and Insurance FMOs (www. Bedrockfs.com). BWMAdvisory, LLC (BWM) is registered as an Investment Adviser with the SEC and only conducts business in states where it is properly licensed, notice filed or is excluded from notice filing requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Any comments regarding guaranteed income streams or similar refer only to fixed insurance and annuity products. They do not refer, in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by BWM.

PO Box 4202 Olympia, WA 98501 (360) 464-2979

ADVISORS MAGAZINE - NOV p.45

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by matthew d. edward

Fiduciary Rule Presents

he Department of Labor has proposed the implementation of a fiduciary rule which would require all financial services professionals, including stock and insurance brokers, to put their clients’ interests before profit or commission considerations. The proposed rule is currently on hold, but if approved, it could ban commission sales of investment products. This would present investors with a quandary: What if it’s in the investor’s best interest to pay a commission? “If the industry did away with commissions, a lot of those small, small clients are going to be left by the wayside,” Diane Jochimsen, MS, CFP®, president of White Raven Financial, said during a recent interview with “Advisors Magazine.” “If we have these simple IRAs and a small business owner has a SIMPLE IRA, these people just starting out have nothing and we have to take care of those people as well.” White Raven Financial provides fee-only comprehensive investment and financial planning services. Additionally, the firm offers hourly consulting services to clients who cannot – or don’t want to – pay advisory fees, but need specific questions answered.

Quandary for Advisors White Raven Financial maintains a $200,000 firm minimum. Hourly consulting allows Jochimsen to assist younger clients who recently started saving and need some direction in developing a financial plan. Many of those clients wouldn’t benefit from paying a full advisory fee and keeping an advisor on standby, meaning that the fiduciary ruling may complicate serving this niche in some ways, she added. “Sometimes people just have a question they need help with, and I’m okay with that,” Jochimsen said. White Raven Financial is a fiduciary, meaning that clients’ best interests come before commissions or the bottom line. While the firm does not offer commissionable accounts, Jochimsen does not think that all financial professionals need to operate on a fee only basis. “There is a place for both types of advisors in the financial

services industry,” she said. Jochimsen tries to work with her clients by educating them about how financial products work, empowering them to make their own decisions, and by sidestepping complex financial jargon in favor of simpler explanations. “I try to find out what works best, we all learn differently,” Jochimsen said. “What we try to do is provide a better customer experience. Say things like alpha and beta, the client has no idea what you’re talking about. What we try to do in our customer experience is align the portfolio to the customer’s risk tolerance and goals.” Jochimsen, a former computer programmer, started in the financial services industry with four clients, “Friends who trusted me,” she said. Now, White Raven Financial, based in Arlington, Washington, is adding two more advisors in the coming year and looking to grow its

client base. The firm prides itself on being a standby resource for people regardless of their financial experience level. “I don’t avoid information,” Jochimsen said, adding that she takes the time to understand her clients’ individual needs, and doesn’t just take a cookie-cutter approach to investing. “I make sure to find out where they are at, and then I fill in the gaps.” For more information see www.whiteravenfs.com

Diane Jochimsen offers advisory services through White Raven Financial, a Registered Investment Advisor in the state of Washington.

ADVISORS MAGAZINE - NOV p.47

by jude scinta

LONG-TERM GROWTH, SHORT-TERM DEBT

Micro indicators are key middle market strategies In the foreword of their 2017 Global Transactions Forecast, a joint report prepared by Oxford Economics and Baker McKenzie, they state, “…after continued instability in the first half of this year, the signs indicate that both M&A and IPO activity will pick up significantly as 2017 progresses and into 2018.”

his comes as welcome news to Charles Botchway, founder and Chief Executive Officer of Madison Street Capital, LLC, a global investment banking firm that specializes in corporate financial advisory services and mergers and acquisitions services for lower end middle market businesses. Based in Chicago, and with offices in Asia and Africa, Botchway co-founded the firm seven years ago and works with both publicly and privately held companies. “Because of the segment of the

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market we’re in, the middle market, our clients are very entrepreneurial. One of the things I find is that their business is typically their largest asset that they own. They’re looking for somebody who’s going to be a fierce advocate on their behalf, especially on the sell side if they’re looking to exit the business,” said Botchway. During a recent interview with “Advisors Magazine” that included a discussion about the pros and cons of equity financing for middle market companies, Botchway called it the most expensive financing option

available. “From a company’s perspective, especially with an early stage company that doesn’t have the balance sheet to support a debt facility, being able to attract an equity investor is important. It doesn’t saddle the company with debt that it may not necessarily be able to service, and that applies to older companies as well. But once you bring in an equity investment, they own part of the company and receive a share of profit distributions,” he explained. Conversely, with financing arrangements, once the principal and interest is paid back, the company’s obligation ends. “Once the debt is settled, it’s settled. The equity is yours and you don’t share your future success and distributions with anyone else,” Botchway said.

“Each of these structures have their place and their benefits. The advantage of equity is you don’t have to pay it back and you don’t have to be saddled with debt that you may not be able to support. On the flip side, it costs you more and stays with you for the long-term,” he said. As the bank regulatory environment continues to tighten and the private credit markets expand, venture debt has become the go-to source for working capital for growth stage companies. For the first time, young early stage companies and startups have the opportunity to get debt as opposed to raise equity which is often difficult to do according to Botchway. “For a company that doesn’t have the assets or the cash flow to support a traditional debt facility, venture debt is a new innovation that is really welcome in the marketplace, and I don’t think it’s going to go away anytime soon,” said Botchway. The tech IPO market continues to rebound and M&A activity moves along at a steady pace. Additionally, valuations of emerging companies decreased overall last year along with the rate of venture equity investing. Advisor Magazine asked Botchway if these trends will make it harder for venture-backed companies to continue to raise capital at higher valuations. He offers an interesting perspective. “The assumption is that it’s the macro factors that impact valuation. I think that for companies trying to raise new rounds of money at higher valuations, the dynamics are more micro,” he explained. “To get a higher valuation on the next round, the company should have attained certain milestones that were set up during the previous round, and if the company hasn’t moved forward at all from when it raised its last round of money, then it doesn’t deserve a higher valuation – regardless of what the macroeconomics are.” He continued, “If the marketplace is trending towards higher valuations and multiples are higher, that doesn’t necessarily mean that a

particular company that’s not hitting its targets deserves to get a new round of financing at a higher valuation. The specific details of a particular company going out into the marketplace to raise a round is more impactful to valuations than what the overall economy is doing.” Botchway acknowledged that while both public and private companies should stay focused on short-term targets, it must be done in tandem with setting strategies for long-term success. “The conversation has been centered around short-term activity for way too long. Publicly trading companies are making announcements and reporting their earnings on a quarterly basis and CEO’s are focused on making shortterm improvements that allow them to announce better earnings the next quarter, and the next quarter after that, to satisfy analysts. There isn’t enough conversation being had about the capital expenditures that it takes to grow a company, and how that’s tied into long-term revenue growth. There seems to be a focus on short term cash flow, versus what it takes for long-term sustained growth and profitability of companies, and I think that needs to change,” explained

Botchway. Madison Street Capital, with its extensive experience for raising capital for middle market companies and supporting a wide range of transactions, has been built on a plan of controlled sustained growth with strategic benchmarks along the way. “We’re unique in the marketplace in that we’re a boutique firm, but we act, move, and operate with a mindset of the bulge bracket firms,” Botchway said, adding that clients receive senior level attention that they wouldn’t get with larger firms. “We have solid pipelines that we’re working on going into 2018, so we’re excited,” he said, adding that he’s energized by industry discussions about potential tax cuts for corporations. “It doesn’t matter what the rate is, as long as something does happen, it’s going to be a boon for the business environment and M&A activity.” For more information on Madison Street Capital, LLC visit: madisonstreetcapital.com

ADVISORS MAGAZINE - NOV p.49

by amy armstrong

barbara smith taylor ceo of retirement outfitters, llc

Social Security Education

Lays Groundwork for Effective Retirement Planning Social Security isn’t going to go broke by the time you reach age eligibility. That notion is just one of many myths creating insecurity among working investors who not only want – but need – to use the government program as a base upon which to place other retirement funding. The fear-mongering that leaves p.50

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clients questioning the legitimacy of including Social Security benefits in retirement planning is often despised by professionals within the financial planning industry. Rumors that the United States Social Security Administration (SSA) will run out of monetary resources within the

next couple decades are fueled by speculative reports from mainstream media that grasp on to a fact here and there, but provide little longterm perspective. It is a thorn in the side of financial planners attempting to teach clients strategies for maximizing benefits derived from their working years marked with regular contributions to the system. The misinformation leaves planners holding a mess of statistics and “what-if” scenarios weighed down with a client’s panicky emotions creating more concern than ability to identify which concerns deserve attention and which ones should be left to the wayside. “People have a lot of questions when it comes to how Social Security will work in their plan,” said Barbara Traylor Smith, CEO of Retirement Outfitters, LLC, based in Grand Junction, Colorado. “Some do not want to fully count on it; some cannot wait for it to begin.” It is the leading reason her practice offers a non-stop calendar of classes and seminars aimed at educating current and prospective clients regarding the workings of the SSA. She wants her clients to have facts – and not myths or rumors – as guidance in their respective decisionmaking. The leading myth: There won’t be any money left in the system by the time a client reaches age eligibility. It is true that payments most likely will drop. Economic forecasters specializing in analyzing population trends and impact on the Social Security system expect that between 2033 and 2037 the monthly check for a SSA recipient will be 25 percent less than what it would be if the current payout formula was maintained. It is an important factor to plug into any retirement planning scenario since according to the SSA, 50 percent or more of an elderly person’s income comes from that monthly Social Security check. According to the Administration, that monthly check equals 90 percent

of income for 22 percent of married elderly, and 47 percent of unmarried elderly. Maximizing the amount of a retirement that can be funded via Social Security is a useful tool, Smith said. But the end game of employing that tool shouldn’t necessarily be focused solely on balance sheets and column tallies. Instead, Smith wants her clients to think about its impact on their lives. “Financial planning is not so much about the money as it is about your life,” Smith said. “It is about answering the question: How do we create a financial plan based on your

goals? What is that you want to do in retirement? What is it that brings meaning and purpose to your life? What is your passion?” Smith said answering those questions and identifying those things will then provide the framework for a financial plan in terms of investing and spending. “Those are the pieces to start with,” she said. From there, a client is able to more accurately determine if current resources are sufficient to provide the structure to support their dreams, hopes and goals as they reach age 70 and beyond. “They have to be able to ask themselves and answer for themselves what their expense and income will potentially look like at those ages.” Smith enjoys guiding clients through this type of deep, selfanalysis. It is significantly different from the work that started her career after graduating college with an accounting degree. She was doing taxes and audits and noticed that many clients had not engaged in even the beginning elements of retirement planning. About ten years into her career, Smith began to ask herself what she could do to help clients prepare for the time when work would end. “I found this industry called financial services,” she said. “And I found my calling. It has been a wonderful adventure for me. I get to sit eye-to-eye, belly-to-belly with people and help them carve out their retirement plan.” Her goals for client interaction are to cut through the financial jargon that only an advisor understands anyway. Her goals for client education are to show clients – not only through simulations, but also via their own long-term personal experience – the impact that early and consistent contributions to their retirement funding can and will have on the end result.

IT’S NOT ABOUT YOUR MONEY, it’s ABOUT YOUR LIFE You’ve spent your whole life defining your idea of the perfect retirement, and you’ve worked each day to save for it. Now it’s time to ensure you can live your retirement the way you’ve always dreamed.

“They may not understand the meaning behind all of the numbers,” Smith said. “And that is okay. That is what I am here for. We all have different talents. If you were to ask me to teach fifth grade English, I would not be very good at that. But what I can do for a client is work diligently on their behalf to honor the current consumer-driven demand dictating that their financial well-being is safeguarded by the professionals helping them manage their money.” Learn more about Barbara Traylor Smith and Retirement Outfitters, LLC, online at www.gjretire.com

Retirement Outfitters 744 Horizon Court, Suite #350 Grand Junction, CO 81506 Phone: (970) 256-1748 www.gjretire.com

ADVISORS MAGAZINE - NOV p.51

Purpose Based Planning The Different Levels of Your Financial "House"

long term care

estate planning

Trusts

Powers of Attorney

Health Insurance

Life Insurance

Roof Represents Protection

Taxes

Health Care

Longevity Risk

Inflation

Market Risks

Fees

Interest Rates

Diversification

Family Needs

Main Level represents Investment Concepts

Social Security

Pensions

Annuities

F o u n d at i o n R e p r e s e n t s R e t i r e m e n t I n c o m e

Steele Capital Management

Investment Advisory Services offered through BWM Advisory, LLC. A Registered Investment Advisor Office (360) 464-2979 | Toll Free (877) 658-0354 | Fax (360) 334-7782 Aaron@SteeleCap.net | www.SteeleCap.net BWM does not provide legal or tax advice. All investing contains risks, including the loss of principal. Insurance services provided under separate license. Claims paying ability based on individual Carrier financial strength.

by matthew d. edward

FORGING STRONG

RELATIONSHIPS

THROUGH ADVISOR AND CLIENT EDUCATION

A good financial advisor keeps learning, even after years on the job. Also, the best financial advisors know when to admit that they don’t have an answer, and how to find someone who does.

“One advisor is not typically a master of every area we need to work on with our clients, so we really work with a lot of collaboration,” said Robert Turner, CLU®, ChFC®, AIF®, president and chief executive officer of Capitol Financial Solutions, LLC. “Often our advisors collaborate with our clients’ trustees, attorneys, accountants and other professionals to ensure a comprehensive approach to customized financial solutions.” With over 50 independent advisors, Capitol Financial Solutions, based in Raleigh, North Carolina, provides wealth management, financial planning, retirement planning, insurance, and other services to clients from a wide variety of backgrounds and income levels. The firm invests considerable effort into educating its advisors, and challenges them to “reinvent the firm to provide additional value to the clients,” Turner said. Turner joined a friend’s firm shortly after becoming an advisor in 1990. It was there that he had his first experience with training new advisors. When he started Capitol Financial Solutions in 2005, he did so on the premise that the firm has an obligation not only to train its advisors to be their very best, but to educate clients in how to make better financial decisions as well. Prepared clients, Turner said, can not only withstand market shocks, but they also can communicate their needs and risk-tolerance more effectively to their advisor. “There’s going to be changes, there’s going to be volatility, let’s talk about how you’d react to that now and make sure you’re not taking too much risk, which could really derail your discipline to stay on track,” Turner told “Advisors Magazine” as an example of a p.54

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Robert Turner, CLU®, ChFC®, AIF® President & CEO Capitol Financial Solutions, LLC

typical discussion with a client. Capitol Financial Solutions uses a variety of tools to assist clients ranging from software to experienced advisors who know how to help guide clients through rocky financial straits with confidence. “Today, financial advisors have great financial planning tools and software that allow them to plan out scenarios,” Turner said, adding that these can include long-term care needs, the impact on a financial plan if a spouse dies, and other unexpected problems. “Most of these things can be modeled out pretty well,” Turner said. The new tools also help Capitol Financial Solutions better assist clients by providing customized financial plans in line with clients’ goals. For many clients, it’s no longer about “alpha,” and more about taking a personalized, goal-based approach to financial planning, Turner said. “In the past, I think clients have been chasing what the hottest thing is, or the best return, or the hottest stock,” he said. “But we’ve always taken the philosophy of fundamental investing, which is better than chasing the hot thing of the day.” The firm does not simply rely on technology or algorithms, however, and believes strongly in one-on-one advisorclient relationships. Turner said those relationships are especially valuable today when clients’ can turn on the television or open a web browser and immediately be bombarded with financial news, sensational headlines, and contradictory advice. “Information overload, that can be a double-edged sword,” Turner said. “It can cause investors to make the biggest mistake they can make, and that’s failure to act.” A good advisor’s role is to help take the emotions out of investing, so that clients can keep their goals in focus without being sidetracked by the noise. An automated tool, mobile application, or financial algorithm simply cannot replicate the sort of relationship needed to help investors through difficult market corrections — or to assist them in not

going overboard when times are good. “I think it’s hard to replace that oneon-one relationship when you’re trying to help someone develop and maintain and stick to a disciplined strategy that meets their risk tolerance,” Turner said. Turner also explained that Capitol Financial Solutions acts as a fiduciary, when providing fee-based services. “At our firm, we always put our clients’ interests first, and we believe that there should be a unified fiduciary standard for all advisors that cover all products and services,” he said. Turner added that he believes that advisors should take responsibility for their clients’ financial well-being, especially when the law does not, such as in the case of over-complicated 401(k) disclosures. Clients have an obligation to educate themselves and understand the financial products they use, Turner said, but often the complexity involved makes that difficult. “I really believe it’s incumbent on the advisor to help the client navigate through that,” Turner said, adding that disclosures and other financial documents should be simplified by law. Capitol Financial Solutions also emphasizes frequent client communication so that investors do not feel helpless

when the market takes a downturn. Turner said that while the 2008 financial crisis was difficult, the firm picked up several new clients during that time who felt their previous advisors were not communicating enough, adding to the daily stress of making it through the market collapse. Prioritizing communication also reminds clients that their advisor is approachable and willing to take the time to answer their questions, Turner said. For more information see www.capfs.com

c apitol

Financial Solutions

Registered Representative/ Securities and Investment Advisory Services offered through Signator Investors, Inc., 8816 Six Forks Road, Suite 301, Raleigh, NC 27615 Member FINRA, SIPC, a Registered Investment Advisor. Capitol Financial Solutions, LLC is independent of Signator. 201-20171013-392112 ADVISORS MAGAZINE - NOV p.55

by matthew edward

SOUND PRIORITIES

GUIDE FINANCIAL PLANNING SERVICES Having a superior knowledge in finance doesn’t make you the best advisor, but combine that knowledge with superior listening skills and now you have a winning combination.

ome advisors tend to focus on numbers or specific services and forget to listen to what clients are telling them. Listening to and accurately interpreting a client’s needs is a skill that is an absolute necessity for advisors. Joseph A. Miceli places such a high priority on listening to his clients, that face-to-face meetings are the norm at Miceli Financial Services, Inc. And, right from the start, Miceli’s goal is to put people at ease. “The first thing I tell clients when we sit down is that I have not scheduled another meeting to follow my meeting with them. I let them know that their meeting is very important to me, and so is their time, and I’m not going to rush them out of the office,” said the president

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and CEO of the Bartlett, Illinois-based firm he started in 2010. Clients are further reassured as Miceli explains that the firm’s disciplined approach, financial models, and specific tools used to create customized solutions for them are bolstered by academic research from Dimensional Fund Advisors – a global investment management firm founded on finance science and who offers equity and fixed income strategies to financial advisors, consultants, and institutional investors. Another top priority at Miceli Financial Services is client education, because so many people are unsure of or intimidated by financial terms and concepts. Miceli endorses that

financial literacy should be a part of classroom curricula that starts for students in grade school and continues through high school and college. “It would help prepare students for when they enter the workforce and have to start making their own investment decisions,” he said. “The more educated you are, the more informed you are, the better decisions you can make.” “Our philosophy in working with our clients is based on an educational approach. I look at myself more as a teacher than anything else. We are helping them design a philosophy through patient in-depth conversations which allows us to offer a holistic approach to financial and insurance planning,” explained Miceli. “We listen very intently to our client’s needs. Once that is completed, we design a creative solution, and then we go through the implementation process.” While there is a plethora of information available on the internet about financial matters, Miceli said that people will still need to

Mission Statement By way of a family atmosphere, red-carpet service of trust, integrity and commitment, and customer interaction second to none, we at Miceli Financial Services create innovative solutions for our clients’ financial concerns using a holistic approach.

consult with a financial advisor to ensure their investments are consistent with their goals. “I think we will see more interaction with technology regarding investing, especially with the millennials, but I believe clients will still want to have authentic conversations with advisors, because we offer more than a transactional approach to investing. We are a combination of a life coach, educator, planner and consultant as we teach clients how to navigate through the complexities of the investment world,” said Miceli. While Miceli wears all those advisory hats, he understands that his first priority is acting as a fiduciary on his clients’ behalf. “When someone is managing the assets of another person and therefore takes on a relationship of trust, confidence and/or legal responsibility, they must put the clients’ best interest ahead of their own resulting in objective planning recommendations,” said Miceli, offering his definition of a fiduciary. “It all goes back to education. If we can

present financial information in a way that’s practical and understandable, it will be more relatable to their current investment decisions. It needs to be presented in a way that they can connect the information to their goals and dreams, and they can visualize it. If we can demonstrate a clearer way to navigate through all the complexities of investing, I believe clients will be much more engaged in the process – and we try to make it as much fun and as engaging as possible,” said Miceli. Miceli, a two-time scholar athlete and a graduate of The Ohio State University, is living his dream since he opened the doors of Miceli Financial Services, and he said he works passionately with clients to help solve their needs. “It was always a vision of mine to open my own wealth management firm. We went back to our roots to build the practice with hard work, integrity, and a fun family atmosphere,” explained Miceli, acknowledging how his Italian parents and grandparents encouraged education, a strong work ethic, and integrity as he and his siblings were growing up. Calling his entire team, a “super powerhouse,” Patricia Schod, Santrissa Pitts and Jaclyn Luif, Miceli said, “We continue to grow our business at an annual growth rate year-overyear of 15 percent. Through organic growth and acquisitions, we have built Miceli Financial Services into a solid wealth management firm. We are currently managing 115 million of client assets and work hard to service them.” Recently, Tania Vasquez has taken on the role of Vice President of Operations for the firm in anticipation of further growth and expansion.

In 2015, Joseph R. Miceli, the eldest of Miceli’s four sons joined his father and the rest of the staff to continue to build a robust, service-focused wealth management firm. Michael A. Miceli is studying business, along with Nicolas J. Miceli who is obtaining a Masters in Accounting and Taxation and then followed by Anthony V. Miceli, all designated to join the firm. The following year, Joseph A. Miceli earned Executive Council status, distinguishing Miceli as a top producing financial advisor with Cetera Financial Specialists. “We pride ourselves on our red-carpet service with our clients. They are our number one priority,” Miceli said. Joseph A. Miceli is a Financial Advisor, with securities offered through Cetera Financial Specialists LLC, member FINRA/SIPC and advisory services offered through Cetera Investment Advisers LLC. Cetera entities are under separate ownership from any other entity. His office is at 260 E Army Trail Rd, Suite F, Bartlett, IL 60103 and he can be reached at 630.372.2291. For more information on Miceli Financial Services, Inc., visit: micelifinancialservices.com

ADVISORS MAGAZINE - NOV p.57

by matthew edward

fiduciary advisors,

know how to find one Helping clients take better control of their financial future

ew wouldbe investors could probably define the term “fiduciary.” And that is why so many get pulled into weak investment strategies and poor products by bankers and brokers who put their needs before the client’s. “This fiduciary rule came about because so many bankers and brokers took advantage of so many people with variable annuities, for example, where they got 8% commission upfront and clients were never told,” said Brian Decker, chief executive officer p.58

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of Decker Retirement Planning, Inc. “They get paid every year you own that variable annuity. The insurance company gets paid every year that you own that variable annuity. The mutual funds get paid every year you own it. It’s three layers of fees that add up to 5 or 7 percent [annually] before you make a dime.” Decker Retirement Planning, Inc., is a fiduciary retirement planning firm with offices in Kirkland and Seattle, Washington, and Salt Lake City, Utah. Fiduciary means that Decker Retirement Planning puts clients’ needs ahead of the firm’s interst, bottom line. And that’s something Decker wishes

more financial service companies would do. “You should be able to have the correct assumption that any advisor working for you is required to have your best interests at heart,” Brian said. Decker Retirement Planning, Inc., typically serves clients over 50-yearsold who are preparing to retire. The firm does require a minimum amount of investable assets from prospects which is $300,000. The Decker team helps walk clients through the retirement planning process in about seven or eight meetings that are designed to be straightforward. Client plans are projected to age 100 – useful

as lifespans increase and strain retirees financially – and highlight investor income and withdrawal expectations in a way that “lays everything out in black and white,” Brian said. “It’s a common sense mathematical approach to show the income streams they have and put a [cost of living adjustment] on it. It can provide clients with peace of mind that when the markets get crushed and it won’t destroy their income,” he added. Brian hopes to have $200 million assets under management by the end of 2018, and he stakes his ability to properly handle those assets on a methodology that differs from the usual Wall Street way of doing business. “For reasons that make no sense to us in retirement planning, the bankerbroker community trots out this onesided, buy-and-hold strategy for people in retirement, so every seven or eight years, you’re going to get whacked like in 2008,” Brian said. “There’s been strategies for decades that offer a twosided approach … We’re fiduciaries so we use those.” Spotting a fiduciary can be difficult for the uninitiated. Brian said there are three requirements prospective investors should look for to find a fiduciary. First, any fiduciary will be required by state law to put clients interest ahead of themselves. Second, your fiduciary advisor would have a Series 65 license, so ask to see proof. And last, a fiduciary can charge fees, but commissions are off-limits. That “three-fold test” will allow a prospective investor to sort fiduciaries from the non-fiduciary advisors who often ply self-serving products. The fiduciary mindset leads Brian to help minimize his clients’ risk exposure, which allows them to weather market storms with fewer losses. It also helps keep costs down for clients, Brian said. “Typically, we only have around 25 percent of their money at risk, only 25 percent,” he said. “Bankers and brokers were charging their clients on all of their money because all of their money is in fees. We charge clients only for the money that we manage that’s at-risk.” “Our clients have about 75 percent

of their money that is principal guaranteed. For most people, that’s just unheard of these days with the low interest rates,” Brian added. Decker Retirement Planning, Inc., also helps mitigates client risk by listing out potential problems, projecting their likelihood, and planning for the worst. Client plans are subjected to stress tests for everything from the death of a spouse to a severe market correction, Brian said. “We go right down the list of the biggest problems, 22 of them, and we try to flush out any weaknesses,” Brian said. Brian has experience handling client problems. He described his “baptism” in finance as 1987’s “Black Monday,” when the market dropped almost 25 percent in a matter of days. Clients poured in demanding to know what to do next, and Brian said he advised them to “hold on” and ride out the

market. Luckily, Brian said, 1987 was “one and done,” and did not become a prolonged crisis like the 2008 market collapse. Brian believes that proof in his model resulted from the 2008 crisis. Decker Retirement Planning had six managers at the time, four made money in 2008 and all of them were able to give clients returns the year after. “These models have not had a losing year in the past 16 years,” he said. The key, Brian said, is in trusting your advisor to do what’s best. Clients who realize that they cannot do it all are the ones who tend to work best with a capable, fiduciary advisor who’s looking out for them. “I’ve got to trust my dentist when he tells me he has to do some work,” Brian said. “We have a saying in the business that you can save a lot of money doing your own dentistry but it’s not recommended.”

Seattle, WA | Kirkland, WA | Salt Lake City, UT 1-855-425-4566 | info@deckerrp.com

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2016 EDITORIAL

TSM

January Game Changers in the Financial Industry Bipartisan Budget Act of 2015 Key Economic trends to watch in 2016 Suitability Vs. Fiduciary Standards Choosing the right Financial Advisor

March

September

Small and Mid-sized Business Growth Educating our Kids Financial Literacy Markets & Personal Finance

Innovation and Leadership Estate and Succession Planning Inspiring Comeback Stories Small businesses have faced

May

November

Big Data and Cloud Monetizing the Web Information Privacy and Cyber Security Trends Do-It-Yourself Models Expand Role of Technology & Outsourcing

Business of Presidential Politics Reading Between the Lines PACK Money Misappropriated Recovery and Growth of the Middle Market

July Important Trends and Challenges for Executives Startups Overvalued Silicon Valley Bubble Retail Financial Advice Consumer Changes in Attitude & Behavior Wealth Concentration

Editorial Department Michael Gordon The Suit Magazine 718.619.8520 editorialdept@thesuitmagazine.com www.thesuitmagazine.com