Rachel Cruze helps Americans manage money

ADVISORS

NOV 2020

ISSUE 99

magazine

rachel cruze helps americans manage money

Robos Continue to Grow Financial advisors weigh in

Joshua Sanchez

Advising athletes and entertainers

Entrepreneurs & the Pandemic Stay nimble, flexible, and resourceful

Erwin E. Kantor Michael Gordon Jude Scinta L. Guerrero

CEO & Publisher Managing Editor Editor-in-Chief Writer-at-Large

Eric Daniels

Billing

Sean Rome

Creative Director

Bobby L. Hickman Amy Armstrong Joe Innace Harold Gonzales Lumi Subasic

Feature Writer Feature Writer Business Reporter Business Reporter Business Reporter

CONTRIBUTORS & GUESTS Steven Selengut IAR, Vitaliy Katsenelson CFA, Elaine Eisenman, PhD & Susan Stautberg, Tim Sheehan

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ADVISORS MAGAZINE / 3

contents nov 2020 on the cover

14

Rachel Cruze New book helps mainstream America manage money and plan for the future

features

6

Robo-advisors Continue to Grow Financial professionals discuss trends in online advice and trading platforms

20

Joshua Sanchez, Taking Care of Business Helping athletes abd entertainers to manage sudden wealth

66

Coould Covid Kill Entrepreneurship?

Andi Gray, president of Strategy Leaders, shares outlook and tips for success

14

made for you

RACHEL CRUZE, NEW YORK TIMES BESTSELLING AUTHOR

38

Our picks from around the globe

6-

advisor interviews

robo advisors continue to grow

10

Don't Wait to Start Financial Planning advising athletes and entertainers

Early education, investment knowledge and a defined purpose are keys to success

20 could covid kill entrepreneurship

4 / ADVISORS MAGAZINE

NOV 2020

10

28

Leaving Las Vegas for a Better Bet Discovering time-period retirement planning

nov 2020 advisor interviews

34

56

Income Streams Project Retirement

BUILDING WEALTH

Combat risk head on - save early, save often

36

Your Financial Journey, Your Way Strategy outperfoms comparison

38

Continuing a Family Legacy

START FINANCIAL PLANNING

Embracing financial education that empowers

40

10 36 28

LEAVING LAS VEGAS FOR A BETTER BET

Financial Advisors Bring Added Value "You get what you pay for"

43

Closing the Personal Attention Gap

INCOME GENERATION

Listening to clients boosts financial planning success

44

56

Discussing fiduciary duties is vital

Team, timing, and tenacity

It's all About Building Trust

STRATEGY OUTPERFORMS COMPARISON

Seizing Opprotunity for Building Wealth

46

60

Not all advisors must act as fiduciaries

Shifting away from asset accumulation

Addressing Fiduciary Confusion

Pivoting to Income: Generation in Retirement

48

62

Direct, personal and often

Avoiding investment insomnia

High-touch Client Service

Withstanding Market Volatility

50

64

Pivot to stay competitive

Financial health amidst pandemic worries

Re-evaluating Firm Prosesses

60

2020 Sees Risk Management Activity Rise

52

68

Born to advise

Financial well-being and preparing for the future

A Firm With A Focus: Retire Right

Aligning Assets with Aspirations

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70

Clients biggest assets often overlooked

Educating "one sip at a time"

Helping Owners Prepare for Retirement

Waking Up to Financial Literacy ADVISORS MAGAZINE / 5

by bobby l hickman

ROBO-ADVISORS CONTINUE TO GROW

Financial professionals see limited value in online advice & trading platforms Robo-advising – investing in the market through various online and mobile applications – has exploded in popularity in recent years, attracting users with lower fees, easy-to-use platforms, and smaller opening balances that traditional investment accounts.

How will these automated techniques affect the financial profession in years to come?

While most financial advisors tell Advisors Magazine they do see a place for robo-advisors in 6 / ADVISORS MAGAZINE

NOV 2020

certain situations, they believe most Americans benefit more from personalized financial planning tailored to their own individual needs.

The robo-advisory industry is projected to exceed $1 trillion in value this year in the United States, which accounts for 75 percent of the global market.

A study by InsideBitcoins.com estimates the U.S. industry will grow by 40 percent in 2020, following increases from $191.6 billion in 2017 to $757 billion in 2019. Additional research by LearnBonds.com

projects the industry will reach $1.4 billion this year and $2.5 trillion by 2023. LearnBond. com also found the number of users grew five-fold from 13.1 million in 2017 to 70.5 million in 2020, and should reach 147 million by 2023.

“We live in an increasingly digital world, so the advent of these platforms makes sense,” said Michael D. Lovecchio, director of client experience and senior partner at Jacobi Wealth Advisors in Berwyn, Pennsylvania. “A whole subset of the population wants to do

Joe DiVito, CFP®

as much online as they can, and these robo-platforms cater to that.”

Some people could be well served by robo-advisors and similar apps, according to Judith McGee, L.H.D., CFP®, CEO at McGee Wealth Management of Portland, Oregon. McGee said the platforms can provide education to help people understand concepts such as dollar costs averaging, goalsetting for the future, and present and future value of money.

“This works well when you are in an early, uncomplicated stage of financial maturity,” McGee added “Once financial life becomes more complex, legal, tax, relationships, habits and other emotional issues are part of the planning. The apps and robos probably won’t connect with the client or serve their most important psychological needs.”

Robo-advisors, hybrids, and other apps should be considered within that framework, agreed Joseph A. Di Vito, Jr. CFP® of RBC Wealth Management in Phoenix, Arizona. Individuals with simple personal situations can use automated platforms for basic financial advice without needing to consult an experienced advisor, he noted.

“Taken out of that context, if used to ‘gamify’ the planning experience, our opinion is that software-based solutions will not provide the necessary guidance to avoid future pitfalls,” Di Vito continued, “This can lead to costly mistakes that are often difficult to recover from.”

Lovecchio sees similar risks with automated trading platforms, which generally

do not provide individual coaching to help guide users’ behavior.

“If a school provided all its students a great textbook but no teacher, what would happen?” Lovecchio asked.

“There would be a handful of students who read the book and thrived. But the vast majority would struggle without some coaching or some meaningful dialogue to guide them through it.”

The growth of zero-fee investment brokers and such popular technologies as the Robinhood trading app are luring more people away from traditional investment methods. These techniques use complex computer algorithms to manage portfolios, based on such client factors as risk tolerance and their investment windows.

With lower barriers to entry and greater convenience, robo-apps are drawing in new clients that often have not sought conventional planning and investment services.

However, financial professionals are currently more concerned about human competitors than online ones, according to a 2020 ADVISORS MAGAZINE / 7

survey by Natixis Investment Managers. Sixty-two percent of advisors said they consider other financial planning firms as their main competition today. Only 16 percent of those surveyed identified automated do-it-yourself (DIY) tools as their most significant competitors, while 10 percent classified automated advice platforms as their main challengers.

However, five years from now, most advisors surveyed

by Natixis expect technology will be a more significant factor. By 2025, only 20 percent of professionals expect traditional advisors will still be their main competitors. More than 30 percent anticipate industry 8 / ADVISORS MAGAZINE

NOV 2020

disruptors (such as Amazon, Apple, or Google) entering the market to provide hightech financial advice as the largest threat. More advisors also expect their main rivals will be automated DIY tools (25 percent) and automated advice (21 percent) than have that concern today.

Despite the allure of flashy interfaces and gamified apps, research indicates most Americans still prefer dealing with human beings for financial planning advice. A 2020 online Harris Poll survey commissioned by NerdWallet found 84 percent of people prefer working with a real person, versus 16 percent favoring a robo-advisor.

Almost half of those surveyed

who use a human advisor said they feel confident that their investments will grow, versus only 34 percent of robo-advisor users with an optimistic outlook.

The Harris survey also found 51 percent of Americans want the ability to talk with a live person.

Another 31 percent expressed concern that robo-advisors are unable to consider investors’ individual situations when making recommendations.

“We believe people will always need a holistic plan that takes into account many factors,” Lovecchio said.

“A digital platform simply can’t account for the random critical financial events that a client must plan around for a successful long-term result.”

Di Vito agreed that individuals and families with more complex financial situations will continue to seek quality, experienced, professionals. Those advisors can also collaborate with clients’ tax and legal advisors to develop and maintain comprehensive plans, he noted.

He added that he has rarely heard clients express concerns about using online and mobile platforms. A priority for his firm is to continue evolving its own technology to better provide client service.

“We see the robos and hybrids serving the gap between those who have significant wealth they want to protect, and those who would like to start on the road to getting there,” Di Vito said.

“Once individuals have built significant wealth and their cases become more complex, they outgrow these offerings.

One-size does not always fit all.”

By bobby L. Hickman

DON’T WAIT TO START FINANCIAL PLANNING

Early adoption of investment knowledge and a defined purpose are key to successful long-term plans

M

ost people understand that it is never too early to start planning for retirement, yet only 30 percent of Americans have created a comprehensive financial plan. The longer one waits, the longer it takes to catch up – emphasizing the need for young people to start preparing sooner rather than later.

10 / ADVISORS MAGAZINE

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“Older adults are more likely to have retirement savings and to view their savings as on track than younger adults,” the most recent “Report on the Economic Well-Being of U.S. Households” from the Federal Reserve Bank stated. The Fed study found 42 percent of those ages 18-29 had no retirement savings, as did 26 percent of those ages 30-44 and 13 percent between the ages of 45 and 59. Schwab’s latest Modern Wealth

Index also indicated only 34 percent of millennials have a written financial plan.

Many people wait too late in life to begin planning their financial future, according to Charles Carrick, CFP®, ChFC, investment advisor’s representative and partner at DMJ Wealth Advisors, LLC. “I think the biggest challenge facing our industry is that younger professionals are not engaging in a

formal process of financial planning and investing early enough,” Carrick said. “Maybe they'll save in a 401(k) plan somewhere. However, they have no idea whether that is going to support their long-term objectives.

They may not have even thought about some of those things.”

He said many people make choices primarily based on whether their cash flow will support those decisions.

However, they should also evaluate

spending within the context of a financial plan addressing their ultimate goals. For example, people may not evaluate how buying another home or another car could impact their finances over a 20-year period. What are the tradeoffs? If you considered them, would you still take this action?

“I think earlier education would be a strong fundamental way to improve the lifestyles and support the goals families have,” Carrick said. “I’m not sure if

more workplace involvement would help. But I do believe that if there were a way for financial planners to construct programs to engage people earlier, we could help them make better decisions and allow them to better support their long term priorities.”

Carrick said DMJ Wealth Advisors – with five advisors and seven support staff in Greensboro & Durham, North Carolina – is part of a consultative comprehensive planning practice ADVISORS MAGAZINE / 11

Accounting and Consulting Services in North Carolina

703 Green Valley Road Suite. 201 Greensboro, NC 27408

12 / ADVISORS MAGAZINE

NOV 2020

that coordinates with their sister firm, DMJ & Co., PLLC. They are separate entities but work closely together. The CPA firm has many traditional clients but also serves a large medical and dental consulting client base. About 90 percent of DMJ Wealth Advisors clients are also clients of the CPA firm.

“This has worked well because the CPA firm can identify those clients who might have a need that fits into the strength of our service offering,” explains Sheryl Austin, CFP®, ChFC, CLU, also Partner in DMJ Wealth Advisors. Austin has more than two decades of experience working with through this partnership model. “We've been able to identify opportunities and provide results for those clients through comprehensive planning for the past 20 years. Our Wealth Management firm has grown from essentially a scratch organization, to a Registered Investment Advisor with just under $500 million in assets under management. That was all through organic growth, and the vast majority came through word-of-mouth from clients and DMJ CPAs.” The DMJ Wealth Advisors team also includes Jeff Hwang, CFP®, CRPC, Partner and Lead Advisor and Greg Carrick, CFP®, CIMA®, Investment Advisor Representative.

Brad Mann, JD, QPFC is the firm’s Qualified Plan Specialist.

Collectively, DMJ advisors are more than money managers: they view themselves as comprehensive planners. Each client starts out by bringing in their own budget, cash flow expectations, and anticipated capital needs for future needs such as retirement. Then they work together to build a 30-year plan.

The plan includes variables for

possible capital needs, such as new car purchases, family weddings, education, or second careers. This plan drives the investment process and helps clients understand how DMJ can provide real value in planning and investment of assets.

“Essentially we're building a model, and then we're giving the client the controls so they can work through their priorities and tradeoffs” explains Jeff Hwang, CFP®, CRPC and firm Partner. “It's almost like game-playing where we set up the scenarios for them. Then they're building in what they want to do at different times: What's the impact of buying a second house now, versus maybe selling a house in 10 years and maintaining a downsized residence? What is the impact of retiring two years early?

What’s the impact of doing Roth conversions now?”

Those conversations and whatif scenarios create individualized plans tailored to client’s goals while shifting the focus away from the technical aspects of investing.

Advisors typically meet with clients three times a year where they mainly focus on financial planning.

In a typical 60- to 90-minute meeting, Carrick said, only about 15-20 minutes are spent talking about investment portfolios.

“We typically have clients that are nearing retirement or experiencing some form of a life transition,” Carrick said. “They are serious about the planning and are more proactive in trying to develop a financial plan. They like that value we can provide by laying things out for them in an organized thoughtful long-term scenario.”

Over the past 10 years, while the economy and the stock markets were going well, “what-if” scenario planning was on the back burner

for many clients – despite DMJ’s efforts to raise their interest and illustrate its importance.

“Typically, it was not as big of a priority for many new clients,” Carrick noted. “But when you start seeing some of the challenges we now face in the economy, it raises scenario planning to a higher level with new and existing clients. Now they are very interested in pursuing it to understand whether they're protected properly for various events that could occur.”

When times are good, clients frequently go online to check their account balances to see how much their assets are growing. But during downturns, Carrick continued, they tend to not open their mailed statements or log on. He said online client views decline when things turn down in the economy, such as during market declines over the first quarter of 2020. He added those were the times DMJ advisors proactively engaged clients to talk about how those declines were impacting their plans and reassured them about their portfolios.

“During volatile times, a client may review their investment statement and be motivated to take actions based upon the normal emotional fears of the market. However, in our update sessions, a client comes to understand that they should not measure their success by a single quarterly statement but rather on the ability of the investment to support their financial plan or prioritized lifetime goals. We often see the stress dissipate and the client appreciate the rewards of a sound financial plan.

“Yes, there are times we may need to make some adjustments to their plans,” he continued, “but they are reassured by seeing their goals are still achievable.” DMJ helps

clients shift their perspective from a quarterly report to rewards generated from a 30 year forward looking plan.

“We also understand there were ways to navigate this, and there are things you can control,” he said. “So, if the client has a 4.5 percent draw rate from their account, for example, maybe we’ll take out 4 percent for a period of time to catch up. We're not planning on selling anything when the market has a short-term impairment. We typically have money in reserve so they can weather storms and recover, and allow assets to return to where they were over the long run. They leave that meeting feeling much more confident about where they are with their plan.”

“We want every client to know how they are invested and why they are invested in the manner they are.”

Carrick said that knowledge puts purpose behind what they're doing and supports their goals.

“There's a lot clients can control when it comes to financial planning opportunities,” he added, “we believe the value obtained from controlling what can be controlled can bring as much confidence if not more to a financial plan than trying

to predict or outmaneuver the market -- which is something that nobody can do on a consistent basis.”

For more information on DMJ Wealth Advisors, visit dmjwa.com 703 Green Valley Road, Suite 201 Greensboro, NC 27408 p:336-275-9886 Investment Advisory Services offered through DMJ Wealth Advisors, LLC, an SEC Registered Investment Advisor.

Representatives may transact business only in state(s) in which they are properly registered or licensed. The opinions and views in this article are intended for informational purposes only and should not be considered investment, tax or legal advice or a recommendation to buy or sell any particular security. Please consult with your financial, tax and legal advisors regarding your particular circumstances.

L/R: Jeff Hwang, C. Greg Carrick, Sheryl W. Austin, Brad Mann

ADVISORS MAGAZINE / 13

by joe innace

CRUZE CONTROL Smoothing out the financial road for the young and old.

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NOV 2020

rc

#1 NEW YORK TIMES BESTSELLING AUTHOR

RACHEL CRUZE ADVISORS MAGAZINE / 15

Fun fact: Rachel Cruze loves pizza.

That’s something important to know about her, she notes on her website (rachelcruze.com).

Maybe it’s all that pizza, but the personal finance expert, best-selling author, motivational speaker, and mom of three, certainly seems happy. And she is busier than ever guiding others on a road to contentment, especially when it comes to their financial situations.

Her new book, Know Yourself, Know Your Money, published by Ramsey Press is available for pre-order and will be released January 2021.

“Understanding why you handle money the way you do changes everything,” Cruze, a Tennessee native, said. “When you understand your motives, you’re able to reach your goals faster,” she continued.

“For over a decade, I’ve been helping people get out of debt, build wealth and create a life they love. So much of my work has centered around teaching people how to clean up a financial mess.

But when you understand how your childhood, your fears and your dreams shape how you manage money, it creates serious life change that lasts.”

Know Yourself, Know Your Money takes readers through the key factors that shape how people manage their finances, including their childhood influences, money fears, dreams, motives and more.

The book shares practical insights.

“The biggest obstacle from where you are today to becoming wealthy is NOT opportunity or income—it’s you controlling you,” Cruze notes, explaining that the book allows the reader to explore how one’s behavior is the biggest obstacle to making good decisions with one’s money. “When you take a closer look at your behavior and beliefs, money problems are usually just a symptom of a larger problem in your life,” she adds.

Cruze maintains that the way our parents viewed money shaped our money personality and she takes readers through the four types of childhood money classrooms. She also breaks down 16 / ADVISORS MAGAZINE

NOV 2020

No pressure there! But eventually I realized that a budget is the best way to tell my money where to go. I found that the more I did it, a budget didn’t limit my freedom—it gave me freedom

"

the six money fears that drive most money decisions, and teaches the reader how to make healthy money decisions.

“Understanding yourself is essential to understanding the way you handle money,” Cruze says.

And she identifies seven money tendencies that we all have—and that can be unlocked to better comprehend our own psychology,

strengths, and challenges.

The daughter of personal finance maven Dave Ramsey, Cruze grew up learning how to win with money. She understands the dangers of debt, and she’s seen firsthand the damage it can do. She knows how to give generously, spend wisely and save for the future. Her passion is to help others learn those same principles.

The father-daughter team co-

"

authored the bestseller Smart Money, Smart Kids, and Cruze followed that with Love Your Life, Not Theirs—an immediate New York Times bestseller. Cruze has appeared on Good Morning America, The Today Show, Katie and Fox & Friends, CNN and she’s a contributor for magazines like Woman’s Day and Glamour.

Aside from appearing regularly in print, Cruze can be heard on radio and podcasts around the country, and seen on her own The Rachel Cruze Show™, on YouTube, Apple Podcasts and other outlets.

“I hated budgeting with a passion growing up, which was awkward, since my dad is financial expert Dave Ramsey,” she says.

“No pressure there! But eventually I realized that a budget is the best way to tell my money where to go.

I found that the more I did it, a budget didn’t limit my freedom— it gave me freedom.”

Now at age 32, Cruze has addressed hundreds of thousands of students, young adults and parents over the past several years, sharing with them how to get on the right track and avoid big money messes.

While COVID-19 has somewhat cut into Rachel’s personal appearances, she has spoken at women’s conferences, churches and companies across the country.

She’s an engaging speaker and a person of faith, who shares her stories and money advice in a way that’s relevant, fun and uplifting.

Nowadays, lessons from Cruze

ADVISORS MAGAZINE / 17

– found in her books and many appearances – have become mantras for many who seek out her insight. Among her greatest hits to date: • “Personal finance is 80% behavior and 20% knowledge.”

• “Debt basically enables people to live a lie.”

• “Every dollar you spend is a reflection of your values.”

• “Practice doesn’t make perfect; practice makes permanent. And permanent, positive change is what we’re after.”

• “Money is a magnifying glass.

It's makes you more of what you already are.”

• “With parenting, more is caught than taught. Your kids are watching your habits and how you interact with money.”

• “It's a disservice to kids when they are handed everything they ask for. Giving boundaries and limits is a gift within itself.”

• “You're not a bad parent if you can't pay for college. College is a blessing, not an entitlement.”

This summer, even as the pandemic was spreading, Cruze never let up.

“The Pandemic Was Your WakeUp Call,” was a recent episode of The Rachel Cruze Show™, during which she said that one in four middle-class households in the United States could not pay all or some of their bills due to COVID-19.

“And that means a lot of people out there did not have an emergency fund,” Cruze said, “But even in a time of job loss and health crisis, you can have peace about your money…no matter what, whatever the situation, you can do something about where you’re at. You can take control.”

And control – by being more diligent about budgeting, reining in spending and finding even the 18 / ADVISORS MAGAZINE

NOV 2020

smallest of ways to save some money – can turn a crisis of panic into one of mere inconvenience, according to Cruze.

On the podcast, Retire With Purpose, hosted by Casey Weade, CFP®, she talked about her upbringing by Dave and Sharon Ramsey.

“I think people assume when they hear, ‘Oh, you’re Dave Ramsey’s daughter,’ that we had mutual fund parties for our birthdays and we went to budget camp every summer,” she recalled, adding, “All these stereotypes come in people’s heads. Honestly, it was nothing like that. Mom and dad, they were great at teaching us how money works but it was done in such the ebb and flow of life.”

She explained there were no mandatory sit-down seminars or meetings about money that she and her sister had to sit through.

“It was really just what real life brings and money, and they kind of just brought it into conversation. For that I’m really thankful; very, very thankful,” she said. “They did a great job teaching us and also letting us make mistakes – I always say that about their parenting style – which I really appreciate.”

Perhaps most present in the Ramsey household was a sharp focus on education. “They let us learn,” Cruze noted on the same podcast, speaking of her parents.

“They were like, ‘Yeah, okay. If you fall down here, you’re going to learn that it hurts. If you spend that money on that thing and it breaks two days later, it’s going to hurt but you need to figure that out.’”

Today, Cruze’s core messages around spending, saving and giving are not only for her fans and followers, but for her young children. One key: Cruze and her husband do not give allowances to the kids. In their home, it’s called a commission. And it’s an important distinction.

“Amelia, our oldest, we just started implementing that and my sister’s oldest, William, he’s doing it too,” she said on the podcast.

“Their chore chart is up. During quarantine I really thought, ‘Okay, we could really buckle down and get in a good rhythm.’ I’ll be honest and say, yeah, some days we’re great with it, some days we’re not.”

Cruze describes her oldest, only five years old, as being much more of a pleaser and doer. “She’ll go and she loves to keep score

and all of that. She’s right on with the commission system. She gets it, she thrives on it,” she said.

The amounts of the commission are not set in stone. But Cruze insists on the three big things, and shares the same advice with other families wanting to school their kids on matters of money.

“You can make a percentage, whatever you think is best for your family on the give, save and spend. Having them do all three is really important,” she said. “Some kids you’re going to find they just would give it all away, which is great. That’s a wonderful trait, but they have to learn to save money eventually.”

“They have to learn to spend wisely,” she continued. “Some kids they just want to save it all and hoard it and keep it all to themselves. No. You need to teach

them to also give and also how to spend.”

Cruze readily admits to being a natural spender, still to this day.

“That’s how I was as a kid. It was good for me to learn, ‘Okay, no. I have to have delayed gratification.

I need to put some money away and I need to give some money away.’ All three of those money muscles (saving, spending, giving) have to be built.”

Getting to zero debt Part of Ramsey Solutions, Cruze adheres to its doctrine of getting to zero debt – excluding mortgage debt that’s no more than 25 percent of take-home pay.

“Everything else, we promote no debt,” she said. “It’s an extreme viewpoint, but the reason we say this is because not only does it just lower your risk – when you own everything your mind, your spirit,

your emotions – financially you’re in a completely different mindset.

When you don’t owe anyone anything, you’re not having to keep up and you’re not trying to play this math game of interest rates and trying to get a better deal here or there.”

Cruze emphasized: “Listen, when you own it all you sleep better at night. You’re not stressed. So much is taken off your plate when you know, ‘I’m completely in control.

When my paycheck comes in or that investment check comes in at retirement, that is mine and I get to decide to do whatever I want with it.’”

Taking charge and having the freedom to decide are common themes running through all of her books. Perhaps the next one should be titled: Cruze Control.

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ADVISORS MAGAZINE / 19

TAKING CARE OF BUSINESS

JOSHUA SANCHEZ

ADVISING ATHLETES AND ENTERTAINERS

T

by joe innace

he average person might wonder why highly paid pro athletes would ever need business guidance. But their incomes vary widely depending on the sport. The average National Football League player’s salary is about $2 million per year. The Major League Baseball player’s average is about $4 million per year and the average annual salary in the National Basketball Association is about $7 million, according to CNBC. When caught up in the action of watching a game, fans may forget that pro sports are major businesses. The players, however, are usually not well-versed in financial and business matters. So, after the final score — and between games and seasons — who do they turn to for such matters?

Sometimes, it’s an old friend with business savvy. And since 2016, for more than two dozen clients it’s been Unlimited Management, LLC in Long Beach, California, headed by CEO Joshua Sanchez.

A native of Long Beach, a hotbed of athletes who went on to play in the NFL, Sanchez played football in high school and college, making many friends along the way. Fact is, the business of Unlimited Management grew quite organically.

“I was one of those friends that took football 20 / ADVISORS MAGAZINE

NOV 2020

seriously, but you know, everybody doesn’t make it to the National Football League, so I focused as much on academics,” Sanchez told Advisors Magazine in a recent interview.

But one of his good friends did make it to the NFL: three-time Pro Bowl selection DeSean Jackson, a wide receiver for the Philadelphia Eagles. “I grew up with him, and that’s how all this kind of trickled,” Sanchez said.

Growing up, when he, Jackson and other friends got together, they all knew that Sanchez’s family was into real estate. And in being exposed to such an environment, just hanging out together, the seeds for a business were planted — even though Sanchez and friends may not have known it at the time.

“A lot of these kids are from inner city communities so when they came to where I was, it was just night and day based on their own experiences,” Sanchez explained. “They became involved in an environment that was totally different from their upbringing.”

Sudden wealth can be a game changer, and there came a time when some — like Jackson — signed pro contracts and became very successful.

For many, being in the NFL was more of a shock to the system than the hardest hit on the football field.

“It was a new space that they took on, when

ADVISORS MAGAZINE / 21

“

IT ALL PARLAYED FROM JUST DOING A GOOD JOB FOR CLIENTS ON THE SPORTS SIDE AND THEN TRANSITIONED TO THE ENTERTAINMENT SIDE

“

it came to transitioning not just playing the sport, but the actual business of the National Football League,” Sanchez said.

Some quickly discovered they needed a trusted friend — someone they’d listen to when he’d suggest not buying a Ferrari right away, but instead focusing on a budget and the tax implications of new-found wealth.

“They knew that when it came to business, there was a comfort level in coming to me because of my background and my family’s background in real estate,” Sanchez recalled.

Going the Distance For pro athletes, the money tends to come fast and at a young age. And while an NFL annual average salary of $2 million may sound like a lot to the typical person, a pro athlete’s career is far shorter than most people’s careers.

The average NFL career lasts 3.3 years, according to the NFL Players' Association.

Sanchez, armed with business 22 / ADVISORS MAGAZINE

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acumen and after acquiring years of real estate skills, recognized that as individual athletes became very successful, they needed guidance and direction for their decisions.

Initially, Sanchez advised a group of close friends with whom he had relationships that were nurtured over time. He got to a point where he wanted to transform such advice for friends into a true business.

“So, I used that network to transition what has transpired over the last 10 years into a business,” he said. “I understood what the model should look like, so I wanted to create a business management firm, and now that’s Unlimited Management LLC.” His concept of business management is at the intersection financial literacy and business practicality.

“A lot of these young men and women in these spaces have so much activity that we get involved from A to Z,” Sanchez said. “That can be

from handling their accounting, their budgeting, their bill paying to business advice, to insurance, umbrella policies, estate planning, taxation, tax returns to legal as well.”

Unlimited Management now has in-house attorneys, specializing in entertainment, corporate and business law.

Today, the firm counts 10 employees out of its one central office in Long Beach and is involved with the NBA, NFL, Major League Soccer and entertainment—actors, writers, musicians. With 30 clients ages 19 to 65 in all different sports and entertainment, the company also services small businesses for a collective total of some 200 hundred clients. About 25 percent of clients now are women.

Growth has been fast and strong. In 2016, Sanchez started with two clients. In 2017, he signed on John Ross III as a client, that year’s NFL number nine draft pick and now a wide receiver with the Cincinnati Bengals. “That was a big deal.

I was 26 years old,” Sanchez recalled. “So, we’ve been adding about six clients per year.”

Among the most recently added is college basketball star Jayden Scrubb, who declared for the 2020 NBA draft, which will be held November 18.

Leveraging the Network Sports and entertainment are connected and those in such industries all need guidance and business advice.

“It all parlayed from just doing a good job for clients on the sports side and then transitioned to the entertainment side,” Sanchez said.

Unlimited Management represents several record labels, and also works with

entertainment mega-agency Roc Nation’s Emory Jones. Another good friend and entrepreneurial mentor is Michael Rubin, coowner of the Philadelphia 76ers and the NHL’s New Jersey Devils.

As CEO, Sanchez’s main role now is mostly oversight and building Unlimited Management.

“We actually just started, for some of our clients in the real estate sector, to get into the venture capital (VC) side as well,” Sanchez said. “We do not handle any securities — no stocks or bonds, that’s completely outsourced to a banking partner of ours which is Citi National Bank.”

Growth leads to additions to staff, and Sanchez said he’s always looking for talented

business managers with connections to expand in the existing space and beyond.

“When I think of taking the company to that next tier, you have to have people like myself who have a network; I initially brought in all the clients. Now, it could be business managers bringing in their book of business, or looking to build a book of business.”

Interestingly, the pandemic has also helped the firm grow.

Sports seasons were delayed.

Athletes couldn’t report to camp. There were no shows being produced or concerts being staged. So, some suddenly had time to reconsider who and what they had in place for their personal affairs.

“A lot of their focus has been on ‘how am I doing?’” Sanchez

explained. “And as they focused on this, we actually gained clients.”

Sanchez now does little day-today client work. Still, he’s always ready to help — especially a friend.

“The point is, we’re not just going to be here during their playing careers or their entertainment careers,” Sanchez said. “We want to put them in a position to have longevity.

They’re going to make a lot of money in a short period of time and they need individuals and teams next to them that can help them navigate a space with integrity at a high level — and make sure they’re doing the right thing.”

ADVISORS MAGAZINE / 23

LEAVING

S A G E LAS VETTER BET FOR A B

by joe innace

Discovering time-period retirement planning 28 / ADVISORS MAGAZINE

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I

t’s often said that investing in the stock market can be like frequenting a casino. It’s ‘a crapshoot’ is a common description, owing to market volatility, gyrations and the risky nature of the endeavor. Even the primary tool to test long-term expected investment portfolio growth and the impact of withdrawals is known as Monte Carlo simulation.

So, why not a former craps dealer to offer financial advice and retirement planning?

and we earned tips, so I enhanced my customer service skills,” he recalled.

“I also watched greed in action.

Gamblers would sometimes get way ahead, 20 or 30 times their original buy-in, then give it all back when the dice got cold. Not very different from bull markets followed by bear markets.”

His big takeaway from that experience was that good times do not last forever and to make rational, as opposed to emotional, decisions.

He left Las Vegas for California

Meet Steven Margulin, CPA/PFS, CFP®, ChFC, Wealth Manager and the managing member of Retirement Extender® in Albuquerque, NM, who took such an unusual path to his current livelihood.

“From age 21 to 26, I was a craps dealer in Las Vegas; I was always good with numbers and sure got an education in an adrenaline-filled job,” Margulin told Advisors Magazine in a recent interview.

Margulin will tell you that every step of the way through his career has helped him gain important knowledge that has shaped the financial strategist he is today. And early on, there were valuable lessons learned in Vegas.

“We were paid minimum wage,

and earned a bachelor’s degree in Economics. In 1986 he passed the Certified Public Accountant exam, then worked as a CPA and as a school district controller. In 1992, Margulin opened a small CPA firm to prepare tax returns for the semi-affluent.

“During my very first year of business, tax clients were asking me questions about their investments and whether their financial advisor was doing a good job for them,” Margulin remembered. “I really did not know, so I got licensed and started taking coursework so I could provide an educated answer. This led to tax clients moving their portfolios to me.”

Since then, Margulin has built a firm of ten other experienced professionals ADVISORS MAGAZINE / 29

Ideal Client Strategist

Steven Margulin-Wealth Manager, CWM, LLC.

Insurance

Tax

Life, Disability, LTC, P&C, Health, Medicare

Yilian Martinez-Rodriguez, MJ Kawamoto, Steven Margulin

Money Manager

Carson Wealth (CWM, LLC.)

Client Service

Legal

Amanda Hauke, Yaqi (Anki) Fang

Steffy, Finlayson, Traub, Jones Wealth Manager Steven Margulin CPA/PFS, CPF®

Personal Health

Financial Advisor

Dr. Sally Fisher, Zoe Nance

MJ Kawamoto, Mike Barnes, Yilian Martinez-Rodriguez, CWM, LLC.

Financial Planner

Yilian Martinez-Rodriquez, MJ Kawamoto, Mike Barnes, CWM, LLC.

Wealth Advisor Michael (Mike) Barnes MJ Kawamoto MBA Financial Planning Associate Yilian Martinez-Rodriguez EA, CPF® Client Service Manger Amanda Hauke Client Support Specialist Yaqi (Anki) Fang

Retirement Extender® 7301 Jefferson Street NE, Suite B │Albuquerque, NM 87109 Phone: 505.345.6611 │www.retirementextender.com

in many areas of financial planning.

He said everyone earns a salary, and there is no pressure on anyone to sell anything or get new clients.

EXTENDING RETIREMENT Entrepreneurial and driven, Margulin developed the Retirement Extender® method and trademarked the name in 2009. Today, it’s the firm’s name and website identity. With it, the team uses a time sequence portfolio construction method that some simply call bucket planning.

“We use three time periods which are named Distribution, Down the Road, and Growth. Everyone has a different cash flow,” he explained.

“Some people are projected to purchase a new car in seven years and others in twelve. Some are projected to take large vacations in a given year, after Covid-19 is behind us of course, 30 / ADVISORS MAGAZINE

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Tax Diversification

Personal Health Dr. Sally Fisher-Physician Nutrition Specialist Zoe Nance- Exercise Physiologist ꟷ Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor.

and others aren’t.”

So, savings are invested according to how much a client will use and when they will use it. Rebalancing occurs between accounts or not, based on if the account has had a positive return for the prior year.

Retirement Extender® implements a buy low, sell high philosophy, and will not sell low unless absolutely necessary. The firm tests that the portfolio allocation allows financial planning success using Monte Carlo simulation, in which running 1,000 trials are run to test the probability of different outcomes. Individual holdings and the rebalancing within an account are outsourced, but the Retirement Extender® team will rebalance between accounts based on market activity and the needs of each individual client.

“I learned a long time ago that if I worry or don’t worry about the stock market, it still performs the same.

The Retirement Extender® method helps me not look to change the portfolio based on fear, either mine, or the clients’,” Margulin said.

FINANCIAL PLANNING WITH AN EYE ON TAXES As of September 2, 2020, there are 658,267 actively licensed CPAs in the United States, according to the national database of CPAs, the Accountancy Licensee Database (ALD). Margulin has also always used his CPA and tax preparation experience to his advantage and on behalf of his clients. It’s at the heart of his business philosophy. He’s also a CMA—a Certified Management Accountant.

“I tell a joke that I order the special

tax lenses for my glasses at Costco so I can see the tax ramification of every transaction,” Margulin quipped. “I use those glasses and that mindset every day because taxes are a crucial factor that should not be overlooked.”

The firm prepares tax returns for all its clients as part of its service. And as a CFP™ practitioner, all clients have financial plans. Investment management is outsourced to Carson Wealth.

“We also look after the client’s overall well-being,” Margulin explained. “We help them live the life they desire by helping them make smart choices about their money.”

Margulin insists on helping clients to look after themselves and toward this end the firm is adding more health-related services for top-level clients. These include providing two meetings a year with an Exercise Physiologist for a written assessment, and two meetings a year with a Physician Nutrition Specialist also for an assessment.

“In subsequent years, they can schedule an update meeting, also at our cost, with these health experts,” Margulin said. “My rationale is that these clients have saved money all their life and may be reluctant to invest in themselves. I will offer education tailored specifically to them with a focus on helping them enjoy the healthy life they deserve.”

Margulin conveys three core principles to clients: 1) Pay off debt, including mortgage debt, because this creates flexibility when there’s a surprise need for money; spending is not linear. 2) Donate to charity.

3) Tax diversification, to maintain a blend between taxable accounts, tax free, and tax deferred.

“For example, if someone has $1 million in an IRA, the amount that is available for spending after taxes is much less,” he explained. “If an individual needs $40,000 for living costs after $36,000 in Social Security

I learned a long time ago that if I worry or don’t worry about the stock market, it still performs the same. The Retirement Extender method helps me not look to change the portfolio based on fear, either mine, or the clients’ -- STEVE MARGULIN ®

income, then has a home remodel for $100,000, that home remodel will really cost $145,732 before federal and New Mexico income taxes.

That is not the same as spending $100,000.”

By planning years in advance to have money for future use, however, one could have accumulated $30,000 in a Roth IRA and another $20,000 in regular savings. If those sums were applied to the home remodel, the additional amount from the IRA would only need to be about $71,000.

PANDEMIC OPPORTUNITIES Over 14 trading days from March 4 to March 23, 2020 one of the most dramatic stock market crashes in history occurred. The Dow Jones Industrial Average (DJIA) plunged some 8,500 points during that span due to COVID-19 panic selling, down roughly 31 percent. Public health was the primary concern, but some investors recognized the chance to restore health to their portfolios.

“This has been a great year to identify opportunities that can help improve clients’ financial lives,” Margulin said. “We took advantage of the bear market in March by buying stock on sale.”

The Retirement Extender® team

also took IRA distributions up to the top of clients’ current tax bracket and added the net portion to their taxable accounts, and/or by performing Roth Conversions. They did tax harvesting, or selling investments that had declined in value to take advantage of capital losses for income tax purposes.

“We changed out an investment strategy that was not performing and are now in the process of adding a higher yielding fixed income investment to part of the mix,” Margulin noted. “Currently the stock market has just reached its mid-February high, so we are exercising our ‘sell high’ philosophy and rebalancing portfolios between accounts again.”

In a casino, a craps player never knows how the dice will land. But as a financial strategist, Margulin’s investment acumen is aimed at providing calmness and confidence – that no matter what happens in the world, the economy or the markets, clients have a higher probability of achieving their financial life goals.

To learn more about Retirement Extender, visit: retirementextender.com

Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor.

Hypothetical investment results presented in this article are for illustrative purposes only.

Converting from a traditional IRA to a Roth IRA is a taxable event.

ADVISORS MAGAZINE / 31

www.retirementextender.com | steve@retirementextender.com | (505) 345-6611 Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor.

by amy armstrong

INCOME TALK

MULTIPLE INCOME STREAMS PROTECT RETIREMENT Combat Risk Head on

S

ave early; save often.

Four short words often said by financial advisors; but far too many Americans pay no heed.

Many people haven’t saved enough for retirement and as time marches on, the opportunity to maximize saving potential lessens.

Ed Guanill, owner and president of Guanill Wealth Management based in Sacramento, California, encourages his clients to reverse this decades-long trend.

“We encourage employees who have access to a 401(k) or 403 (b) to start with something.

Anything,” he said. “Develop that habit of saving early on. Too many pre-retirees and retirees started too late because life happens. They raised their kids, paid off debt and sent the kids to college, but now they are more than a little bit behind on saving for their own retirement.”

An August 2020 survey by FinanceBuzz highlights just how little saving is going on in the U.S: 29 percent of Americans admit to saving only one to five percent of their income. Another 34 percent say they save six to ten percent.

The rest aren’t saving at all.

Guanill understands that retirement planning can be overwhelming. Yet, he believes it is vital that his clients take an active role in the financial

34 / ADVISORS MAGAZINE

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INTERVIEW

that we just don’t have control over,” Guanill said.

But clients do have control over creating multiple income streams for retirement, which he sees as the best way to combat the impacts of the silent three – especially health care, more specifically long-term care.

Guanill describes the insurance industry’s approach to long-term planning process and improve care as a “catastrophic failure.” their financial literacy.

Noting that the industry had “Financial speak is a different vastly underestimated how long language for a lot of people,” he Americans would live combined said. with charging low premiums when While most clients can’t explain long-term care policies were first the nuances of how a mutual issued, the industry has now had fund is managed, Guanill says no choice but to raise long-term that clients can improve their care premiums far too high for financial literacy to understand most to purchase. such concepts as “reducing Hybrid insurance solutions equity exposure” and address long-term care “rebalancing to a more needs and make one conservative allocation.” dollar do the work of MISSION “I want our clients to three, Guanill explained.

Our mission is understand – and I am Instead of a “use it or to provide you with innovative willing to educate them lose it” policy, the hybrid financial so that they know what covers three scenarios: a strategies those things mean so death benefit, providing in an effort they don’t feel they are in for additional income in to provide over their heads,” Guanill retirement, and providing financial clarity said. “It is a core value of long-term care benefits. and solutions mine. I don’t want clients “A single funding to help to just release the reins plan that will do three improve your to me. I want us to have things,” he said, adding quality of life. a dialogue; to be on it is an effective tool Making strong commitments the same page together he uses in fulfilling his to you and working toward their primary focus. “I want building goals.” to make sure my clients life-long That goal is what have all the income they relationships guides Guanill Wealth are going to need in are tenets of Management Wealth retirement.” our success.

Management’s proprietary process To learn more Guanill called, “Income First Wealth Management, Planning,” Clients are educated visit: edgwealth.com on the “Three Silent Risk Factors:” taxes, inflation, and the rising cost of health care.

“These risks are moving targets

by amy armstrong

FINANCIAL

TALK

YOUR FINANCIAL JOURNEY, YOUR WAY Strategy outperforms comparison

M

any people use others as a benchmark when examining their own personal progress toward accomplishing their financial goals. Doing so may lead to resentment regarding another’s perceived – but not always accurate – golden lifestyle. More importantly for the team effort between a financial advisor and client, this misplaced focus wastes time and resources.

In a recent Harris Poll, 40 percent of respondents admitted they are guilty of “trying to keep up with the Joneses.” They acknowledge that seeing information about other people’s purchases and vacation prompts them to want the same even if those things were not part of their original plan. Worse yet, many acknowledge that the success of others may cause them to lose hope for improvement in their own circumstances.

“I cannot stress enough to my clients this goal: ‘let’s work on what you want’ and let’s move away from comparing yourself to your friends, family and neighbors and most certainly away from comparing your financial situation to what is happening in the Dow or the S&P,” said Robert Stanlick, managing partner and co-founder of Rocky Mountain Wealth Partners, LLC. “Doing so only causes panic and takes focus off from the goal of accomplishing their own personal financial goals.”

Based in Colorado Spring, Colorado, Rocky Mountain Wealth Partners strives to guide clients away from thinking about what is happening in the stock market

36 / ADVISORS MAGAZINE

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The power of

Sharing Goals and toward thinking about how far they’ve come on their own journey.

Stanlick’s goal is to help clients to open up to him regarding their goals for the future. He wants to learn about their past financial experiences and how that impacts the way they interact with money today. He knows clients often initially are hesitant to talk about the connection between their finances and the goals and lifestyle they seek but facilitating this provides him with valuable insight.

“The more you, as an advisor, can learn about the client – for instance, their dreams and how they process information – makes it much easier for the advisor to tailor the program and

presentation to them without overusing charts, graphs and other materials that may have no meaning to them at all,” Stanlick said.

Stanlick’s approach is to teach clients the “how” and “why” as it applies to their personal situation and then follow-up regularly asking if they have any further questions.

It is a method he learned back in 2008 during the stock market’s housing bubble crash.

“Calling people and asking them what was worrying them goes a long way toward making them feel more secure,” he said.

“I told them, ‘my job is to do the worrying for you. I want to be the one to take the ulcer. Tell me what

Calling people and asking them what was worrying them goes a long way toward making them feel more secure.

"

is bothering you (which he adds usually originates from a news blurb on TV) and I will tell you if your portfolio is being affected.’”

Stanlick said it is his job to calm those fears, and if there is reason for concern, he said being upfront about it is the best approach.

“You have got to be able to tell them the good news and the bad news,” he said, adding that having a strategy for moving forward from any scenario is key to retaining client confidence.

And several strategies may be considered or employed when planning and preparing for retirement.

For some clients, early retirement is a viable approach. For others, waiting to engage Social Security’s

"

monthly payments until age 70 is a better strategy. Evaluating how to protect wealth through using proper types of insurance – perhaps including long-term health care riders is a consideration. Other clients may need to continue working part-time into their golden years to maintain the lifestyle they desire. For some, working longer than they anticipated they would back in their 30s and 40s is best for their physical and mental health now that they are approaching 70, 80 and perhaps even 90 years of age.

Whatever strategy is chosen, Stanlick seeks to make it as individual as each client is.

He knows his clients need more than just financial guidance. They need help from other professionals,

and he is happy to provide just that.

Rocky Mountain Wealth Partners works with estate planning from qualified attorneys with expertise directly in that field. It is essential for clients to have expert legal advice when selecting their beneficiaries and setting up provision for their loved ones after their death.

Stanlick often thinks about writing a book titled, “What Your Advisor Really Wishes You Would Ask” geared toward guiding clients in the process of setting aside their embarrassment or social qualms when talking about money.

But if there is one message he desires to communicate to each client, it is this: Stop comparing your finances to the daily activity in the stock market and the news reports that follow it.

“All that amounts to is something to give the talking head on TV something to talk about for eight hours a day, five days a week,” Stanlick said. “It doesn’t help you toward your goals. What we really want to focus on is building you a quality life.”

For more information on Rocky Mountain Wealth Partners, LLC, visit: rmwealthpartners.com

ADVISORS MAGAZINE / 37

by joe innace

CONTINUING A FAMILY LEGACY Embracing financial education that empowers

Our reasons for becoming financial professionals are deeply personal. We repeatedly saw many friends and family struggling to find the help they needed to map out their financial future

S

ometimes, from the ashes of tragedy enlightenment can ensue.

B. Miles Harris, CFP®, ChFC®, president of Harris Financial Group is all about empowerment through financial education. He was effectively born into a financial services business; his father Terry founded the Dallas-based firm and Miles joined right after graduating Texas Tech.

“My father and I basically were hip-to-hip,” Harris told Advisors Magazine in a recent interview.

“Where he went, I went. But unfortunately, about a year or so after working in the business, he and I were in a private airplane crash.”

Both suffered third-degree burns. After a week in the hospital, Miles’ father succumbed to his injuries and passed away.

Miles recovered, but had other challenges to face.

“From a business standpoint, you can imagine the subsequent turmoil,” Harris recalled. “I was fairly fresh out of college and didn’t know what the heck I was

doing. I was thrown into this position, and fortunately I found I had learned enough to continue the business — and also became committed to learning even more.”

No wonder the firm’s core value is education, which Harris describes as his passion. “I love educating people and seeing them build their confidence,” he said.

“And once they have that ability to make sound decisions, we work with them on an individual basis — aligning their goals to their finances.”

Harris Financial Group is a small boutique firm that employs a handful of professionals.

Miles’ father instilled in him the importance of servicing clients.

The mission was always to deliver financial services in a manner that was unmatched.

“That’s what was meaningful to him, to me, and now the team,” Harris said.

The firm does not insist on a minimum, nor do its clients skew toward a certain niche profile.

Harris refuses to put clients in a silo.

“I don’t really think about how much money a client has, what they do, or how complex or simple their situation is,” Harris explained. “What I look for is: How open are you to learning?

And not only that, but how open are you to being held accountable to reaching your financial goals?”

Harris suggested that being service-centric has prepared the firm well for the major tech trend today of online trading platforms and mobile investing apps.

“I think how the firm has

evolved has married very well with how the industry continues to evolve,” he said. “Today, it’s all about technology and selfservice — taking care of yourself and using robo-advisors, which I think are great,” he continued. “It absolutely empowers people. And at the same time there are still a lot of folks out there who want the hand-holding, and to have their confidence reinforced that they are making sound decisions.”

While Harris is a fan of such self-serve tools, he does wave a cautionary flag. “It’s amazing how a person’s life can change in just a three-month period or shorter,” he said. “I think using these tools is great, but it’s not as easy as putting your finances on cruise control,” Harris continued.

“It all depends on where folks are in life,” he noted. “For someone within five or ten years of retirement, it could be a complete disaster; they might not be able to retire.” But for individuals with a longer retirement horizon, Harris maintains that such platforms and robo-advisors can serve them just fine.

For more information about Harris Financial Group, visit: harrisfg.com

Miles Harris is a registered representative of and offers securities, investment advisory services, and financial planning through MML Investors Services, LLC. Member SIPC. SPIC.org 13455 Noel Rd. 20th Floor Dallas, TX 75240 972-246-1800 Harris Financial Group is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies. CRN202211-274321

38 / ADVISORS MAGAZINE 38 / ADVISORS MAGAZINE

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by Bobby l. hickman

VALUE TALK

INTERVIEW

FINANCIAL ADVISORS Bring Added Value "You get what you pay for"

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obo-advisors, investment apps, and low-cost investment funds are drawing wide attention as consumers face new challenges to the traditional model of consulting a financial planning professional.

However, despite lower costs for those options, most Americans still prefer dealing with human beings for financial advice. A 2020 NerdWallet survey conducted by the Harris Poll found 84 percent of people would rather interact with a real person than deal with a robo-advisor. The most recent Investopedia Affluent Millennials Investing Survey also found 65 percent of those millennials trust a financial advisor and 43 percent use their services.

“You get what you pay for,” said Richard P. Hand, CFP®, president of Valley Forge Wealth Management Inc., in Spring City, Pennsylvania.

“Low-cost products and services put everybody in the same box. That's how they have to do things to get scale and make things cheaper. But everyone is different.”

Within the financial services industry, he said, investment services and products such as mutual funds are increasingly becoming commodities.

“Everyone’s offering something really cheap,” he said. “But you can't really commoditize relationships. I think there's a lot more margin in relationships than there is in selling products.”

Hand said his firm looks at each individual situation to see what makes that client different and unique. His advisors then design customized solutions that do more than just recommending investments. They address such topics as retirement planning, cash flow, estate planning, tax management, risk tolerance, and how to manage risk. His client’s value tailored solutions that help them reach their specific goals.

“Listening to them and really hearing what they say is extraordinarily important. You can't commoditize that, so our approach works well for us.”

He added that many competitors in the 40 / ADVISORS MAGAZINE

NOV 2020

robo-advisor and low-cost sectors do not factor in the complex life situations and various risks people must navigate.

“They are not really addressing topics such as whether you have long-term care insurance, what happens if your pension ends, or whether you have enough life insurance. “What if there is a small business that needs to be sold, a divorce which led to a blended family situation, or a child with special needs?” They only talk about the products they sell, such as mutual funds. We make things as customized as we can for people to make sure they hit their specific goals—while looking at the big picture.

Technology platforms sometimes appeal to investors who are averse to working with humans – more introverted individuals, for example – and who prefer to make their own decisions, Hand said. They can also work for people who are able to make good decisions by learning and understanding the investment environment. “Not everyone is going to hire a financial advisor, but that’s ok.”

However, the biggest danger with robo-advisors and investing apps such as Robinhood arises from the video game-style experience they provide. Gamified platforms also encourage a herd mentality where users make investments simply because others do. People who do not understand why they

are buying and selling can easily lose money through these tools.

“I'm not worried about robos stealing business from us,” Hand added. “In fact, I'd be more inclined to say I get a lot of business from people who tried some DIY platform, lost half their money, and now want some professional help.”

The financial planning discipline offers a broader range of services beyond investments.

For example, preparing for retirement requires comprehensive, individual plans that evaluate a variety of risks and options. Longer life spans are increasing the length of time when retirees will need to be financially self-sufficient.

“You can't get rid of every single risk,” Hand said. “You have to manage them, trading one risk for another in some cases. How you manage risk depends on the clients’ level of risk tolerance, as well as other factors.

We might use annuities that guarantee a lifetime payout to meet basic needs, such as groceries and utilities. Then they can take inflation adjusted distributions from their other accounts. The solution largely depends on how risk-tolerant they are.”

For more information on Valley Forge Wealth Management, visit: valleyforgewealth.com

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IN VE S TM ENTS

by bobby l. hickman

FINANCIAL PLANNING

CLOSING THE 'PERSONAL ATTENTION GAP' Listening to clients boosts financial planning success

Most financial advisors agree that listening to their client’s needs is a critical starting point for customizing financial plans. However, clients often feel that their advisors do not provide personalized attention.

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he 2020 Global Survey of Financial Professionals

by Natixis Investment Managers found half of those surveyed said getting to know clients personally is a significant factor in their success. Yet the same survey listed the top reasons clients leave firms are advisors’ failure to listen to client needs (60%) and communications shortcomings (58%).

Similarly, Qualtric’s Financial Advisor Client Experience Research Report found “lack of personalized attention” was the second most common reason clients switch advisors – and the top reason millennials change.

“Customization does not mean simply relying solely on our prowess to build a portfolio,” said Tim Mitrovich, CEO and chief investment officer at Ten Capital Wealth Management in Spokane, Washington. “It means really listening to the client’s story and helping them build their financial plan. It comes from the attention and education we put into helping the client understand what fits them best.”

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TEN Capital has a formal process they walk clients through in order to know them and their goals better. The defined process goes beyond merely listening to help both advisors and clients identify desired results.

One of the largest industry gaps, Mitrovich said, is that many firms fail to help clients fully flesh out what they want to achieve and what obstacles lie ahead. By identifying those factors, his team can help clients understand how each personalized financial plan addresses their individual needs. The firm then communicates with clients on an ongoing basis on their progress.

“Internally, we talk about all the time about the 3 P’s: purpose, plan, and portfolio,” he added. “We can't build you a great portfolio without knowing where you want to go and how we're going to get you there.”

TEN Capital favors clients who value relationships with professionals who can help address the challenges they need to overcome. With factors such as performance and fees fairly stated across the industry, Mitrovich said, the main opportunity advisors have to provide added value is through their

TALK

personal relationships with clients.

“First comes the destination, and next comes the plan,” he continued. “Then their portfolio becomes the gasoline to get the car down the road to that destination. Certainly that relates to performance and fees. But more importantly, it relates to clients who understand the importance of partnership, and of being thoughtful and intentional in laying out plans.”

Depending on client needs and assets, TEN Capital offers a menu of services it can scale.

Those range from digital support to an ultrahigh-net-worth solution with more frequent personal advisor-client contact.

Financial education is huge factor in each approach, Mitrovich noted, with the goal of empowering clients. Beyond individual client meetings, the firm distributes weekly commentaries through text and video formats, plus provides social engagements throughout the year that include educational opportunities. TEN Capital’s process also focuses on relationship marketing through special events – typically in-person, but currently through virtual connections. They offer a variety of opportunities for clients to mingle in small social settings with each other and their advisors. Clients have shared that they feel more comfortable discussing finances and their personal goals with an advisor with whom they have established a personal relationship.

“We help them understand that building wealth is much more than the S&P 500 return, which is what many people focus on,” he added. “We've developed a communication system that uses everyday speech. We talk in terms they would use with a friend over a glass of wine – not classic market-speak about rates of return or risk levels. If they ask us how things are going, they don't care about the standard deviation of the portfolio. They want to know if they can still help their grandkids.”

For more information on TEN Capital Wealth Advisors, visit tencapital.com

made for you

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In a world of fast food and one-size-fits-all sensibilities, how often does something feel made especially for you? The "Made for You" section celebrates those items that are created with such high quality of hand workmanship and degree of customization that they become individual to you. In each issue, our editors will endeavor to bring you special things from anywhere on the globe, choosing them solely on the basis of outstanding quality. Our goal is to give you guidance on the best of everything.

1 PLANTRONICS CS540 — WIRELESS HEADSET High quality headset: Wideband audio quality includes superior technology that eliminates Wi Fi interference and acoustic protection against audio spikes. Superior range: Wireless multitasking is easy with DECT 6.0 technology, allowing you to clearly communicate up to 350 feet away from your desk. Lightweight design: Sleek design for the most comfortable and lightest DECT headset on the market and includes one touch controls to answer or end calls. Narrowband or wideband: up to 6,800 Hz. Long lasting battery: Features an energy efficient adaptive power system to conserve battery life.

Connects to Desk phone. plantronics.com

4 MARTELL L'OR DE JEAN — MARTELL COGNAC A rare and precious encounter. L'Or de Jean Martell is the quintessence of Martell cognacs: a unique blend of more than 400 rare eaux de vies, revealing a symphony of fresh citrus, fruit, gingerbread and precious wood. It is distinguished by the encounter of eaux-de-vie from Grande Champagne and the Borderies, the smallest and most exclusive terroir in the Cognac region, which create a blend of elegance, richness and power. The jewel bottle, whose shape evokes a drop in which the cognac is enclosed and protected, is the work of master craftsmen from the prestigious Manufacture de Cristal de Sèvres. cognac-expert.com

2 BREITLING SUPEROCEAN — HERITAGE II The Superocean Héritage II takes its name from Breitling’s original 1957 Superocean line of watches—iconic diving timepieces that have been catching the attention of watch enthusiasts for decades now. The ceramic bezel is unidirectional to ensure nothing messes up your measuring. And the sapphire crystal is domed and anti-reflective. Finally, the strap is black rubber: comfortable and long-lasting, even with use in water.

Want a watch that will (excuse the pun) create a splash? Breitling Superocean Héritage II is the one for you. It’s available in black as shown above, or silver blue. mrporter.com

5 AIR-PURIFYING MASK — COMBATS AIR POLLUTION Ao Air has recently unveiled its Atmos face mask — a hightech, futuristic mask that wraps comfortably around the face while purifying the air you breathe. Recently unveiled at CES 2020 in Las Vegas, the Atmos face mask has been proven to provide up to 50 times better air quality than the top anti-pollution masks on the market. In fact, although most air pollution masks can help reduce the amount of particulate matter that enters your airways, they typically don’t seal properly around the mouth and nose areas, which greatly reduces their effectiveness. AoAir.com

3 LORO PIANA BOMBER JACKET — CASHMERE-TRIMMED SHEARLING Some men’s jackets are just designed to look expensive.

Some of them might look incredible but not actually do the job of keeping you warm. Fortunately, Loro Piana’s CashmereTrimmed Shearling Bomber Jacket fulfils both parts of the deal: not only does it look soft and suave, but it’ll actually keep you just as warm as its buttery material would suggest. In fact, if there’s one brand that breezily guarantees top-notch quality it’s Loro Piana, thanks to its textile specialism. us.loropiana.com

6 2021 GENESIS GV80 — THE BEST MIDSIZED LUXURY SUV As Genesis’s first entry into the growing luxury SUV market, the GV80 manages to stand out even against intense competition. They’ve done so by incorporating accessories and add-ons such as an all-wheel drive layout, a dual panoramic sunroof, and the largest wheels the brand has yet debuted—22’ alloys. Genesis ensures that its SUV will be highly valued with thoughtful design. A novel two-spoke steering wheel and plush leather and instantaneous climate control bring the comfort necessary in a truly luxurious SUV. genesis.com ADVISORS MAGAZINE / 43

by joe innace

Allison A. Majka Senior Associate

Charles A. Ferrone, CLU, CHFC Managing Partner

Neil G. Mcinnis, AIF, CLU, CFP® Managing Partner

Frederick F. Sears Senior Portfolio Manager

George P. Webb President and CEO

by joe innace

It's All About

Building Trust Discussing fiduciary duties is vital

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ome trivia: The word fiduciary, according to lexico.com, originated in the late 16th century when it meant ‘something inspiring trust, or credentials’— from the Latin fiducia (trust), and fidere (to trust). Something akin to fiduciary duties, historians believe, even dates back to 1790 BC and Hammurabi’s Code of Laws, which set 282 standards for commercial interaction, several of which dealt with the role of agents.

Today, there is nothing trivial about the term “fiduciary”. It’s thrown around a lot in the financial services industry, making such claims subject to regulatory scrutiny at the most, and creating considerable head-scratching at the least.

In fact, the most important topic an investor should raise with a potential

44 / ADVISORS MAGAZINE NOV 2020

wealth manager is around the subject of a fiduciary, George Webb, managing partner, Pension & Wealth Management Advisors, emphasized in a recent interview with Advisors Magazine. He acknowledged that while the notion of a fiduciary has been a fixture on the institutional investment side for more than 50 years, a fiduciary in a wealth management capacity is relatively new.

“Our firm has always had an institutional background,” Webb said.

“Pension & Wealth Management, Advisors has been managing institutional assets for over 35 years, so that fiduciary orientation is really the foundation of our entire firm.”

Webb explained that a fiduciary works for a client’s best interests and has aligned

interests for the client’s success. “You cannot propose anything—anything—that conflicts with what’s best for a client, at any point in time,” he added.

Unfortunately, in much of the financial services sector, that’s not always the case.

Webb noted that 75 percent of those practicing in the market today typically have competing lines of business—for example, promoting certain securities while also managing portfolios.

“That’s a clear conflict of interest,” Webb said, “making it impossible to be a fiduciary, although they may claim to be. Nobody is out there to intentionally harm a client, but having competing lines of business makes it impossible to work as a fiduciary,” he added. “We truly are conflict-free and independent. We only

their areas. Because of this, there’s a greater appreciation for partnering with an advisor, or people in general, who have deep expertise in areas where they may not, he observed.

“So, we tend to have multi-generational Larissa Gutterman Mark J. Majka, CFA relationships; again, we’ve Associate Chief Investment Officer been in business for 35 years,” Webb reiterated.

“We have many families where we’re managing assets for their children and grandchildren.”

Education plays a significant role in how the company engages clients.

Smart, well-educated clients want information. But there’s so much available nowadays, especially online where financial information can often take the form of sound bites, brief videos, and five or six sentences with hardly any detail.

“An advisor needs to be that expert behind the three clickable lines,” Webb said, “to really get the data to support the right direction derive income from our asset-based fees.” and the right path for the client.” He Based in Waltham, MA, Pension & explained that the firm will distill all the Wealth Management Advisors currently information on a given topic of interest to manages $150 million in assets for over a client, and then lay out the options for 125 families and institutions, with an them in a condensed form. average client asset size in excess of $2 Pension & Wealth Management Advisors million. The majority of their clients are has always advised its clients on a quarterly entrepreneurs, business owners, and basis, and Webb maintained that the professionals. pandemic has been no different in most “We look for clients who are looking for ways from any other major crisis the firm a long-term relationship and who want a has helped clients to navigate. Between partner to work with them in all aspects of quarters, every few weeks or any time managing their wealth,” Webb said. “And there’s a significant event in the market, that includes the process of converting the firm will reach out to clients with income into savings, and then savings into digital media, email, or to arrange virtual investments during their accumulation meetings. years.”

During the height of COVID-19, the Webb said the firm’s clients tend to be long-standing firm counseled clients highly educated and very specialized in to take a long-term view, to focus on

fundamentals, and to observe what was happening. All but two clients remained fully invested throughout the pandemic panic. As the markets sold off, Webb and team rebalanced client portfolios at the right time and clients were pleased, he said. The outreach and relational business aspects of Pension & Wealth Management Advisors form the bedrock of the firm’s services.

“You know a lot of times, an advisor needs to be a co-pilot and a psychologist for our client and the most important thing you can do is to hold their hand and keep them invested through periods of market difficulty,” Webb said. “These can often be some of the best times to reposition and transition portfolios.”

Among the newer services is one focused on what Webb calls emerging wealth. The company designed and launched an in-house robo-advisor, or online investment platform to help to address client needs.

He said the robo-advisor model the firm offers can be very helpful to younger investors with smaller balances and uncomplicated situations—particularly before they have children and usually before they inherit substantial assets. Its place at the firm is as an online investment launching pad.

“But once their balances rise in significance and we can monitor their portfolios—they are going to become less trusting of a computer algorithm, less trusting of a 1-800 number, and they’re going to want to talk to a 30-year seasoned professional,” Webb said.

Robo-advisor platforms, from Webb’s perspective, cannot address tax situations, estate planning, 529 plans, and the many factors that become much more significant as balances grow. With the company’s emerging wealth platform, he and his team can monitor client activity and balances, and then advise them as their situations change, ultimately transitioning them to a traditional full-service relationship.

To learn more about Pension & Wealth Management Advisors, visit: pensionwealth.com ADVISORS MAGAZINE / 45

by bobby l. hickman

FIDUCIARY TALK

INTERVIEW

ADDRESSING FIDUCIARY CONFUSION

Most investors incorrectly believe advisors must act in clients’ best interests

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onfusion over whether their financial advisor acts as a fiduciary continues to plague consumers, despite recent regulatory efforts to establish clearer standards.

Fiduciaries are required to always put clients’ interests first, while broker-dealers have long only been required to make “suitable” recommendations to clients. A Department of Labor effort to reclassify brokers as fiduciaries was overturned in 2018. Last summer, the SEC introduced new rules that require brokers to act in the “best interest” of their clients.

Almost two-thirds of Americans who use financial advisors incorrectly believe they are legally required to make recommendations in the best interests of their clients, according to a recent survey by Personal Capital.

Meanwhile, a 2020 Financial Indicators study found only 50 percent of investors were certain they were being advised by a fiduciary.

“If more people knew they were not working with a fiduciary, they would probably change advisors,” according to Miles Babcock, RFC, IAR, president of Integrity Wealth Management & Insurance Services in Cypress, California. “I believe the SEC and FINRA need to put out crystal clear guidelines and standards across the industry.

That is the only way this will get better for the consumer.”

Babcock, who began his career in life

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NOV 2020

insurance before becoming an IAR, learned the distinction first-hand during the Great Recession.

“After losing over 60 percent of our life savings through one of the largest brokerage firms in the area in 2008, I discovered there were two different standards in the financial services industry: suitability and fiduciary,” he said. “Our experience led me to become a fiduciary. I do not want any of my clients to go through what we did.”

A fiduciary always puts the clients’ best interest first ahead of his or her own interests -- regardless of compensation, Babcock continued. As a financial planner and investment advisor, he largely works on a flat fee AUM basis. His income is not tied to the size or frequency of clients’ trades – the exact opposite of a typical brokerage business model, he said.

“Brokers are incentivized by their employer to recommend specific (often in-house branded) mutual funds, ETFs, and so forth.

They are paid on the quantity, size, and frequency of the trades. Most brokers work for themselves first; for the firm second; and for shareholders third. So where does the investor come in?”

While the ideal definition of a fiduciary is someone who does not earn any commissions, Babcock said, he sells some products that are typically available on a commission basis. Such scenarios demand full disclosure to avoid conflicts of interest.

“If you're going to be a true fiduciary by

definition, you can only be fee-based or feeoriented,” Babcock explained. “The trouble with that approach is that you're going to leave some useful investment vehicles out of the discussion because they only pay commissions. Pre-retirees and retirees alike should have access to the whole universe of investments, not just those that a fee-based planner or fee-oriented broker make available to them. If a fiduciary advisor is going to do the best job possible for their clients, then how can they justify leaving some strategies completely off the table by virtue of their firms' business plan? They can not. So, there is an intrinsic bias because they must do what their employer asks or they don't work there anymore. This is the on-going conundrum within the financial services industry.”

Financial education that addresses such issues is a key part of Integrity Wealth Management’s approach to retirement income, investment, and tax planning.

Babcock takes a personal approach with his clients, noting many people do not truly understand all the planning recommendations they receive.

“We take them through a three-step process that first examines their finances from a tax perspective; then from an income perspective; and finally, from a risk tolerance perspective,” he said. “We have to ask questions to help understand why they have funds positioned in a particular investment; the costs of having the funds in various vehicles; and what the rate of return is versus the risk they are taking.”

Babcock added, “I don't want anybody to be confused about what they own. This is why I do regular reviews to ensure portfolios are positioned properly according to my clients' risk tolerances.”

For more information and disclosures on Integrity Wealth Management & Insurance Services, LLC, visit iwmis.com

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CLIENT TALK INTERVIEW

by bobby hickman

HIGH TOUCH C L I E N T S E RV I C E Direct, Personal and Often

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ost financial advisors acknowledge that strong client relationships are a vital component in building a successful practice. However, many firms still struggle to deliver effective client services.

The 2020 Natixis Global Survey of Financial Professionals found that client relationships – not portfolio performance – are the main reason firms lose clients. The study found 60 48 / ADVISORS MAGAZINE

NOV 2020

percent of clients leave because their advisors did not listen to their needs, while 58 percent said firms did not meet their expectations for effective communication. However, 54 percent of advisors polled by Natixis stated frequent client communications are a critical factor on their firms’ success, while 50 percent said it is highly important to know clients personally.

“One of the things that is quite cliché in the industry, and is often taken for granted, is client services and the client relationship,” said

Sheraz Iftikhar, AIF, managing partner and cofounder of Arch Global Advisors in New York City. “It has become cliché because everyone claims they are unique. Yet when you dig deeper, you see a lot of similarity between one company’s offerings and another’s.”

However, Iftikhar continued, Arch Global’s proactive, high-touch approach provide his clients with a unique and beneficial experience. The company maintains contact with client as frequently as possible, particularly during difficult times. He said his advisors do considerable “hand holding” as needed, and are always available regardless of the time of day or day of the week.

“Clients are confident that we are not only available on the phone or in person, but that we are investing sufficient time managing their investments behind the curtain,” he added. “They see us spending sufficient time bringing them new ideas and new solutions.

That's the biggest compliment that we get from our clients: they see we are putting in extra effort because of the end results.”

One example of how Arch Global provides added value is its proprietary asset management program, Asset Track Program.

For many years, the firm was outsourcing investments to some of the largest money managers in the world, Iftikhar said. In 2015, the company realized those managers’ performance had become substandard.

“We decided this was a relationship that did not benefit our clients if they consistently missed their targets,” he continued. “Plus, at the end of the year, we're the ones facing the client, explaining why our choices of asset managers have not performed.”

That year, the company decided to change the process to become more competitive and to provide its clients with the best possible return. Arch Global hired a Chartered Financial Analyst and launched the Asset Track Program in 2016. The initiative had grown to six investment models and several employees by 2020.

“Over the last four-plus years, we have consistently beaten our benchmarks,” Iftikhar said. “We were also able to reduce costs for our clients significantly. On average, our

clients only pay one-third what they previously and create an investment strategy,” Iftikhar spent on asset management.” continued. “That’s based on making sure the He added, “This was a combination of us client understands what that strategy it is. We taking a proactive approach towards investing don't finalize the strategy until we get their by focusing on performance, and reducing feedback and there is mutual consent.” costs for our clients. We believe in being He added another major factor in Arch proactive. We do not want to be reacting Global’s success is the firm does not make to market volatility or to challenges in the decisions for the client. economy. We should be proactive enough “Our job is to provide advice and to to identify those challenges for before they provide options. Our job is not to make become obvious.” the decision,” Iftikhar said. “At Arch Global Iftikhar added that other firms and advisors Advisors, we are driven by experience and a seem to take for granted how important it disciplined approach. We build investment is to spend time with clients, or the need to solutions that are mindful of our clients’ needs, spend time understanding the challenges not our own. We try and bring wellbeing clients may face in the future. across time and help our clients He added the firm takes pride build a legacy for generations in its process to service existing to come.”

At Arch Global and potential clients.

After the strategy is finalized, Client engagement begins Arch Global implements we put the client by determining whether first, because your that strategy. The last phase prospective customers can is actively monitoring and success is our benefit from the services, managing these investments success. As a fullproducts, and platforms Arch throughout the client Global provides. If there is service independent relationship. a good match, a discovery The firm uses numerous wealth management process follows so the advisor different formats to stay in touch firm, each one can gather data and information with clients and keep them of our associates about the clients, as well as informed. Those include annual provide details about the firm’s reviews, multiple in-person operates as your services and platform. This meetings and – particularly in personal financial allows both parties to mutually the current environment – virtual advocate, giving decide whether to move meetings. They also regularly forward. share commentary on markets special attention “Once that is done, we will to your long-term and the economy. During most establish a relationship, bring years (except for 2020), the financial goals. their investments to our firm, company typically hosts seven

to nine more casual events, golf outings and customer appreciation events.

“In terms of client services, our number one goal is to make sure that they can benefit from our services as professionals,” he added. “We like to keep our clients informed and educated. We take great pride in educating our clients about the markets and their investments, so we can prevent the loss of generational wealth through financial education.”

Iftikhar added, “Arch Global Advisors’ brand values include generational wealth. It is estimated that 70% of families lose their wealth in the second generation, and 90% lose it in the third.”

Financial literacy is important because educated clients make the process easier and more efficient. Unlike many firms, the majority of Arch Global clients are financially savvy, Iftikhar noted. Their largest demographic is clients ages 50 and up who have invested in the markets for decades, although the number of younger clients has increased over the last few years.

“There are a handful of clients – more now than before – who come in with limited information,” he noted. “Our responsibility is to make sure that we educate these clients as much as we can and as quickly as we can.

At the end of the day, if they understand the markets, the volatility, the risk and reward ratio, it makes our work easier.”

Arch Global expects to build its client base in 2021 through an acquisition that will bring total assets under management to more than $300 million. Iftikhar said his firm is updating its model to expand its service offerings to this new set of clients.

For more information on Arch Global Advisors, visit: archga.com

ADVISORS MAGAZINE / 49

by joe innace

COMPETITVE TALK

INTERVIEW

Re-evaluating Firm Processes

Pivot to Stay Competitive

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Jon M. Speight, CFP® - President

Driven to help investors enjoy their lives free from financial worry.

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ith an online trading platform like Robinhood, investors can jump in with any amount, for as little as $1, thanks to fractional shares.

As a result, traditional financial advisor firms are increasingly revisiting the notion of insisting on a minimum investment when taking on a client.

“Although we eliminated our firm minimum of $500,000 for managed assets, my decision had nothing to do with platforms like Robinhood,” Jon Speight, CFP® professional and president of Speight Asset Management, told Advisors Magazine in a recent interview. “I am always evaluating our client offering and realized that we might be discouraging some wealthy prospective clients who either wanted to test-drive our firm with a smaller amount or only had access to a portion of their assets currently.”

Speight Asset Management, LLC is an independent, fee-only, Registered Investment Advisor based in Houston, Texas currently managing more than $80 million in assets for just over 50 client households. The core of the practice is constructing and managing investment portfolios.

NOV 2020

The firm’s wealth management strategies incorporate analytical processes to fully understand client priorities. From identifying short- and long-term objectives, to assessing resources and a client’s level of risk tolerance, the firm first gains an appreciation for each client situation before offering any portfolio-allocation recommendations.

“We spend a lot of time discussing risk, how much they’re comfortable with,” Speight said.

“A lot of times people think, ‘Oh, I need to take on all this risk,’ but maybe they don’t.” Other important areas include having the right life insurance or long-term care plan, or considering longterm disability and other benefits, if a client is still employed.

Evaluating the total financial picture before moving a client into specific investment vehicles is critical. In fact, improved messaging regarding some investment vehicles — along with more emphasis on individual risk tolerance — is something that’s needed in the financial services sector, Speight maintained.

“Much of the advertising that you see, on the financial news channels is focused on a specific fund or ETF and its return,” he explained, “and investors can too often zero in on that rather than choose a portfolio of investments that are diversified and can help them achieve their life goals with the appropriate amount of risk.”

Speight said that his firm draws upon a broad investment universe.

All client assets are custodied at Charles Schwab & Co., Inc., giving his firm the ability to choose from thousands of top-tier investments.

Speight knows Schwab well having worked at a branch in Houston for several years. However, it was Fidelity Investments that gave him his start right after graduating college in 1991. He recalls having great experiences at both companies but neither gave him an opportunity to provide a deeper client experience. This opportunity came in 1998 when Speight was offered a position with an independent RIA firm in town. This, along with his experience working with clients at another firm in town for over a decade, gave Speight the confidence that he could strike out on his own.

Today, only 24 percent of U.S. millennials demonstrate the most basic financial literacy, according to the National Endowment for Financial Education.

“The importance of financial education can’t be overstated,” Speight said. “Every American child should take at least two financial education courses before they graduate high school to teach them the value of money, the value of saving, about spending — and just making better financial decisions early in life.”

Speight thinks such a financial literacy minimum requirement would result in more people making informed decisions related to their finances — putting them in a much better position to be financially independent.

For more information on Speight Asset Management, please visit: speightassetmanagement.com

INTERVIEW by joe innace

A FIRM WITH A FOCUS: RETIRE RIGHT Born to advise

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hildren as young as age four or five may begin to think about their own career, according to the United Kingdom’s Association for Career Education and Guidance.

Some studies also indicate that most American parents see age five or six as not too early to start talking about livelihoods with their kids. Rare, however, is the child who so clearly recognizes his or her career path early on.

Unless you’re Bradley White, CFP®, founder and CEO of San Diego, CAbased Epstein & White Retirement Income Solutions LLC. He’s someone who knew exactly what he wanted to do in life from an early age.

“I’ve always believed that we all have certain things we do really well, and we also have certain things 52 / ADVISORS MAGAZINE

NOV 2020

that we don’t do really well,” White recently told Advisors Magazine in an interview. “Ever since I was a little kid there was just something about math and numbers that was really, really easy for me; it was something I just always understood. And simultaneously, at a young age, I had an interest in money, an interest in finances.”

That comfort level with math and money intensified as White got older.

Growing up, he immersed himself in learning about stock markets and investing. Throughout high school, he never deviated from that path as he prepared to be a finance major at San Diego State University.

“I’ve also been very good at speaking and communicating, and I’ve always liked teaching and I like helping people,” White said. “So, you kind of pour those natural tendencies, interests and skill sets into a pot and that led me to wanting to become a

financial advisor.”

Armed with his Series 66 license, White is also the co-host of a weekend radio show called “Retire Right with Epstein and White.” And while it may seem like White had an early and smooth road to his career, it was not without some bumps and disillusionment. Excited to start out in the financial service industry right after college, he quickly realized it wasn’t all he dreamed.

“From the first day and the first firm I was at, you get your scripts and you make a list of everybody you’ve ever known and you start calling your friends and your family and you just sell, sell, sell,” he recalled. “And that was a very depressing realization right out of the gate. So, the first thing I decided was I’m not going to drink the industry Kool-Aid anymore, I’m going to rise not only past this, but

above this.”

He set about honing his craft.

Spending hours becoming more knowledgeable about investments, taxes, planning, stock markets, human psychology and behavior.

Additionally, he also studied business start-ups.

“I knew that I didn’t want to work at a corporate office, didn’t necessarily want to be a trader like on the New York Stock Exchange floor, I wanted to help people,” White said.

“I just realized that I had to become independent to try to truly have the autonomy to do things that I see fit,” White said, adding, “It was about breaking away; I wanted to make an ethical and moral firm come to life.”

Independent, to White, means having zero-profit sharing with any other companies. So it was in 2013, with an entrepreneurial spirit, that White founded Epstein & White.

“We’re not casting a wide net; the last thing we want to do is disappoint people,” White said. “So,

INVESTMENT AND TAX STRATEGIES USED TO ACCUMULATE WEALTH ARE INHERENTLY DIFFERENT THAN THOSE USED TO DISTRIBUTE WEALTH. LIKE A GOOD RECIPE, THE MAGIC IS IN THE MIX

we’re very clear about our position in the world. We have this niche of retirement income planning. We’re not aggressive, we’re not going to greatly outperform the market.

Rather, our job is to never strike out.”

White said he wants to discuss with retirement-minded clients every scenario—every fear, every dream—and share all the nuances.

That process can start with two, no-obligation consultations, but full-time clients go on a retainer as an active partner, with a typical minimum investment of about $150,000.

White describes the ongoing, tailored services provided as like having a personal chief financial officer. The company’s main goal is the same every year—to have a 98 percent client retention rate—and White said that’s being exceeded.

Epstein & White clients get a lot of education and hand-holding in exchange for that retainer. They become more financially literate, if not fluent in all things finance.

“The people who come to us are not going to be experts,” White said. “So, the balance is taking the complex and making it relevant to them, making it easily understood and timely when it’s needed. It’s not meant as a barrage to turn them into financial experts themselves.”

March 2020, when markets crashed due to the pandemic, is a good example. White said it was all hands on deck at the firm and individual conversations with clients were critical. Such talks helped to both inform and put clients’ concerns to rest. “Remember, in your financial plan you’re going to see a lot of trades in your account; it’s called rebalancing and it’s a way of dealing with times like these,” was among the firm’s consistent messaging.

Interest rates and the fact that people are living longer are two other key messages nowadays.

Interest rates have been at historic lows for nearly a decade. The federal funds rate as of October 1, 2020 was just 0.09%.

“The combination of low interest rates, plus longevity and considering costs for long-term care is creating this unbelievable storm just hurtling toward us,” White said.

The biggest mistake people make, he said, is to take some money out at the start of retirement that may feel like small amounts. But account declines can quickly steepen when people don’t understand how compounding works or how inflation works. “And if you do that — and you deplete those accounts too much that first five or ten years — then there’s little hope for having a long-term care element in your planning.”

So, it’s vital to have a plan built under conservative and realistic assumptions—stress testing, inflation, taxes, rates of return and medical events—and seeing what the plan looks like. That’s the most important thing the firm does, White said, because when all of those events and possible scenarios are built into a plan out of the gate, then the plan can survive those events.

For more information, please visit: epsteinandwhite.com

Investment Advisory Services offered through Epstein & White Financial, LLC

ADVISORS MAGAZINE / 53

54 / ADVISORS MAGAZINE

SEPT 2020

by bobby l. hickman

RETIREMENT

HELPING SMALL BUSINESS OWNERS PREPARE FOR RETIREMENT

Financial planners often overlook clients' biggest assets

S

mall business owners are often underprepared for retirement, with many failing to set aside funds to meet future needs. However, few financial planning firms take advantage of this untapped market by helping clients grow their largest pre-retirement asset: their businesses.

A recent survey by SCORE, the business mentoring group, found one-third of small business owners do not have retirement savings plans. American Express Open Forum found that 30 percent of owners have not even computed how much money they will need once they retire.

Another survey by MassMutual said one third of the business owners surveyed have no retirement assets beyond their own businesses. Mass Mutual also found that 58 percent of small business owners turn to their spouses for financial and business advice rather than seeking expert counsel.

Advising entrepreneurs and business owners on growing their most significant asset is the major focus at Prism Financial Concepts, according to D. Tyler Heymann, founder, investment advisor, and financial architect at the Scottsdale, Arizona, financial planning firm.

Earlier in his career, Heymann noticed

that financial advisors rarely focused on helping clients grow their own businesses.

He built Prism specifically to help entrepreneurs make better use of their capital to improve both their personal and business lives.

“Over a 20-year period,” Heymann said, “I came to realize that while financial advisors are a trusted source of guidance on meeting financial goals, they are largely ill-equipped to understand how to measure the potential of a business; to advise entrepreneurs on how to allocate resources between their business interests and their personal investments; or how to provide context that is critical to understanding when to do this.” He added, “Part of that is a lack of training and experience; partly it is not an area where the industry focuses.”

Learning about each client’s business is difficult yet valuable work, Heymann continued. Improving a company’s results to increase income and valuations can be significantly more valuable for clients than simply increasing ROI on conventional investment assets. As 64 percent of owners surveyed by MassMutual indicated their businesses are their largest assets, growing their companies directly supports their current financial needs as well as

TALK

their eventual retirement.

Heymann said his firm follows a “four pillars” approach to retirement planning, focusing on: • Ownership of the client’s business.

Helping entrepreneurs grow their businesses over the long term provides a stable source of income.

• Real estate ownership that gives clients real, lendable assets on their balance sheets.

• Traditional stock market investments.

• Cash and cash-like instruments to provide liquidity and meet current needs.

“We address the traditional parts of building wealth and reaching financial independence,” Heymann said, “but with a heavier emphasis on business, as that’s our customer base. Everything starts and ends with a living financial plan that shows we are on track. We provide organized records to help clients see their progress and to understand how the four pillars support their retirement.”

Financial education is another critical component of Prism’s approach, Heymann said. Helping clients become more financially savvy makes collaboration easier. As a fee-only firm, he added, Prism advisors do not sell products, so they can provide unbiased and objective advice.

“Our mission is to empower investors to make the best use of their capital through education in partnership with their advisors,” he added. “We provide services to people who appreciate the value of going through the planning process, and we encourage them to ask questions to better understand what they do not already know. Our entire deliverable is built around the idea that we never take advantage of anybody's knowledge gap.”

He added, “That’s my favorite thing about what we’ve built: it’s an educationfirst model.”

For more information on Prism Financial Concepts, visit: prismfc.com

L/R: Bill Luhrs, Marie Powell, D. Tyler Heymann, David M. Busse, Brian Pry

ADVISORS MAGAZINE / 55

by joe innace

SEIZING OPPORTUNITY

FOR BUILDING WEALTH

TEAM, TIMING, AND TENACITY C ustomer loyalty across all professional services is at historically low levels, according to an October 2020 study from Hinge Research Institute titled Inside the Buyer’s Brain. More than 1,900 buyers and 1,600 sellers of professional services were surveyed during 20192020, nearly 40% of whom were in financial services.

The study noted that at the same time as loyalty has declined, more firms have increased their offerings.

This means increased competition, and as a result, customer referrals 56 / ADVISORS MAGAZINE

NOV 2020

are all the more important.

Nationally ranked, Massachusettsbased Heritage Financial Services has seemingly mastered customer loyalty. What’s more, the bonds of loyalty grew even stronger as a result of the pandemic.

“The thing I’m most proud of at Heritage is our long term 99% client retention rate.” Charles (Chuck) Bean III, CLU®, ChFC®, and CEO, recently told Advisors Magazine.

“To me, there is no better evidence of our success than the number of referrals we receive from our clients

and business associates which, ultimately, keeps us healthy, growing and able to continue making significant investments in the firm.”

Bean recalled that the pandemic, at its height in March, rattled everyone.

“Everybody was in a state of shock and nobody knew how contagious the virus was, how many lives would be lost, where the true bottom of the market was and how bad things might get,” he said.

Bean, who founded Heritage Financial Services in 1995 – and

James Scally, CFP® Managing Partner / Charles Bean, III, CLU®, ChFC® Founder & CEO

celebrated its 25th anniversary on October 1 – believes that financial stress can create opportunities.

“Every bear market I’ve lived through created a tremendous opportunity to ramp up communications with clients when they need us most, rebalance portfolios by taking advantage of the volatility, and recalibrate by building new foundations for the future.” he explained.

The firm’s communication with clients is quite proactive, and during the tumultuous market this past Spring and Summer, phone calls, email communications and video conferencing were much more active than normal.

“Our clients want and need to hear from us during times of financial stress and know that we have a sound plan in place,” Bean said. He added “Financial advisors

really earn their fees and stripes during highly volatile times, like we’ve seen in 2020.”

Operating out of two locations in the greater Boston area (Westwood and Woburn, MA), Heritage Financial Services has 34 employees and manages $1.6 Billion on behalf of its clients. They also plan to open a satellite office on the South Shore when the pandemic passes.

“I’m so proud of my team. Every client is surrounded by professionals that are all hands on deck. We learn more from every single crisis and are more engaged with our clients now than ever,” said Bean.

Frequency of client communication, including 3-4 meetings with each client annually and a weekly stream of written content covering topics in investments, planning and other information on the firm’s blog, as well as a structured team approach, are the hallmarks of the firm, according to Bean.

Each client at Heritage works closely with a dedicated senior financial advisor called a Wealth Manager, who has an average of 20 years of experience, and an associate called a Wealth Advisor – both are Certified Financial Planners (CFPs®), and are supported by three

centralized teams.

There’s an investment team of Chartered Financial Analysts (CFAs®) on staff, who as Bean describes, are minding the till and maintaining the integrity of the asset allocation models. The financial planning team works closely with the advisors to put the financial plan and cash flow models together and makes sure the advisors are all up to speed on any new developments that may affect their clients such as taxation, legislation, and planning opportunities. A service and operations team handles all the administrative aspects — opening an account, funding a trust, changing a beneficiary, transferring money to and from their bank accounts, and more. “Every client has a small team of professionals working on their behalf,” Bean said, adding that the firm’s tagline and motto is: ‘Every Detail Matters.’

"To me, there is no better evidence of our success than the number of referrals we receive from our clients and business associates."

ADVISORS MAGAZINE / 57

“Each prospective client has their own set of circumstances where they’ve accumulated various assets and have different careers, livelihoods and aspirations in life.

We really work to dig into the details of each and every client to learn what makes them tick,” Bean noted.

“And then we tailor a personalized financial plan to their liking and design an investment portfolio to get the job done.”

Every client has an algorithm built into their investment plan at Heritage Financial. So, when asset classes experience significant swings in price, we take advantage of the opportunity and rebalance accounts by selling into market strength as risk is rising and buying into market weakness as risk is falling. We are patient and tax efficient with our trading, allowing asset classes to run and move at least 20% against each other before we execute the rebalancing trades.

The Dow Jones Industrials plunged more than 10,000 points from February 14 to March 23, 2020, due to COVID-19 panic selling, losing more than 30% from peak to trough, Bean explained.

“This presented two opportunities to buy into the equity markets when things were falling,” Bean recalled.

“We had triggers set in advance and initiated a rebalance in mid-March, moving capital from investment grade bonds, which had held up well, into stocks which had fallen in price more than 20%.” When stocks dropped another 10% about a week later, Heritage Financial made another round of trades, selling high quality bonds and buying more stocks.

“If stocks continued to drop with valuations off 40% from their highs, which didn’t happen, we had yet another round of trades ready to go,” Bean said. “We had three rounds of trades teed up in the system; two of which got 58 / ADVISORS MAGAZINE

NOV 2020

triggered, and then a quick rebound immediately followed into May and June. So, what did we do? We went back into action and started doing the opposite—taking profits by selling stocks into market strength in a very short period of time,” he added.

The point is: Heritage Financial is very proactive in maintaining the target asset allocation that’s in place for every client which helps minimize risk, enhance returns, and delivers a smoother ride over time. “Some investors will shy away from a crisis, but we believe it’s our job to step up to the plate and take advantage of investment opportunities that present themselves.”

Bean grew up on a small family farm where money was scarce and saw the combination of his personable skillsets and interest in finance as a good match for a career in financial services.

But when he talks about creating a financial plan – especially one for retirement – he sounds like a

hard-working farmer. “You need to plant your feet and hips firmly to make sure you have solid ground to stand on,” he said. “That’s where financial planning starts,” Bean emphasized, “we build a strong foundation with a plan that has the right details and inputs to better understand what our client’s future will look like. This allows us to be much more successful in helping our clients reach their goals with better decision making and sound investment management going forward.”

For more information about Heritage Financial Services, please visit: heritagefinancial.net

Chuck Bean III and Sammy Azzouz, JD, CFP, President

Joseph Arsenault, CFP, CFS, ChFC, Wealth Manager, and Matthew Carron, CFP, CDFA, Wealth Manager

Preserve your wealth with CitiTrust’s knowledge and

Financial Management Solutions www.cititrust.biz

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by joe innace

Pivoting to Income

GENERATION in RETIREMENT Shifting away from asset accumulation

The matter of when to retire varies for every individual. But whenever that time comes, it’s vital to focus less on volatile asset accumulation — and more on stable income generation.

T

he state in which you live can play a major role in how early you can retire, as pointed out in a recent article on Yahoo Finance, which showed the lowest retirement ages, typically 62-64, broadly across southern and midwestern states.

Centrally located in Hendersonville, TN, just north of Nashville, Wood Financial Group LLC sits in the heart of what could be described as the U.S. early-retirement zone. Nearby states like Arkansas, Alabama and Kentucky have an early retirement age averaging 62. In others like Mississippi, Missouri, Georgia, both Carolinas and Indiana, age 63 is the average.

“A lot of people are retiring too early,” Wesley P. Wood, president of Wood Financial Group, observed in a recent interview with Advisors Magazine, which he said can be problematic given that people are living longer, and often don’t have a financial plan in place.

And he should know. The firm’s typical client is someone who is in or close to retirement.

“We’re a conservative firm,” Wood added. “We focus primarily on incomegenerating investment vehicles, bond and bond-like instruments. We do stocks as well, but most of our clients are going to be more focused on income and income planning.”

Indeed, it’s all about income, he emphasized. If a client is able to generate enough income in retirement, year over year, month over month — more income relative to spending — the chance of running out of money over remaining retirement years essentially goes away.

“But I do see, unfortunately, a lot of people who have not done that,” Wood noted. “A lot of people haven’t made the proper adjustments in their portfolios to start focusing on income and preserving their principal instead of accumulation.”

The firm functions as an independent financial planning company, offering objective investment advice grounded in years of experience and insight. And Wood admits to being selective when it comes to clients.

If a prospect is highly bullish — looking for considerable growth in their portfolio — then his firm is probably not the best fit. But a more conservative prospective client who is 60 / ADVISORS MAGAZINE

NOV 2020

looking to go from more growth to income, most likely is a good match.

“Not only do we need to make sure that their philosophy aligns with ours, but we also want to make sure that we like working with them that we’re with them and we’re going to watch their portfolio, each other,” Wood said. “Because some personalities may not mesh make appropriate changes, and weather this storm together.” well and we want to make sure that we’re taking on clients whose Beyond such hand-holding, Wood is also a big fan of mind-enriching personalities mesh well with our firm, so we enjoy working with each and financial literacy. other.”

“It is imperative that our clients have a good And once the work begins, among the first understanding of their core investments in order questions Wood always asks of his clients is: what to ensure that those investments are meeting and a team is the purpose of this money? Along with that, exceeding their goals,” he said. “I’ve determined what are the goals in retirement and what are the that the more educated a client is, the more dedicated to primary concerns? confident they are with their investments, the better our clients, “The first thing we will need to identify is what they understand how their investments operate.” kind of income do you need to have in order to The key is to set proper expectations, and there we approach accomplish all your goals and be comfortable, are a number of ways to do that and educate our work with clients, Wood said. and then develop a plan to get you there,” Wood added. “And if you don’t have enough money to “We do it through workshops, in-person transparency, do that, there are some tough choices to make.” meetings, and more recently a lot of Zoom calls. thoroughness And our clients know that we’re going to be with One of those tough decisions might be to not take retirement too early and, simply, to keep them in good times and in bad, and we have,” he and working longer. Another difficult choice could be to said. professionalism take less income in retirement.

When the economy weakens or the stock market “We must start there,” Wood said. “And if we declines precipitously, or something else dire can develop a plan where we can generate enough occurs, Wood believes it’s best to get out in front of income to where they never have to worry about running out of money, clients, to calm any nerves. then we’ve done our job.”

“I think that’s the main job of a professional financial advisor — to Wood Financial Group doesn’t set a hard minimum investment, but be that kind of steady hand in tough times even if things might not be is typically looking for around $200,000 – or a client with enough assets looking very good on their statements,” he said. to be a good one for the firm. That’s just sound business, something And if clients are treated the way the advisor wants to be treated, the that’s ingrained in Wood. referrals — like Wood Financial is experiencing — begin to come back He grew up in a household where the value of money was taught tenfold, according to Wood. “The more you give, the more you get in and appreciated. Wood’s father was a CPA and stressed the need return as far as your business,” he said. to make sure one’s financial house was in order. His grandfather was For more information on Wood Financial Group LLC please visit: president of a bank, and both grandmothers owned businesses — woodfinancialgroup.net entrepreneurs ahead of their time.

A strong work ethic also appears to be part of Wood’s lineage.

During the peak of the COVID-19 pandemic, he worked long weekends personally making phone calls to clients.

He explained: “Talking with them and just helping them understand, ‘hey, we’re here and here’s kind of what to expect if things get bad, and FINANCIAL GROUP, LLC here’s what to expect in your investment portfolios.’ We just shared with

*

WOOD

ADVISORS MAGAZINE / 61

by joe innace

VOLATILITY

TALK

WITHSTANDING MARKET VOLATILITY sleep on it

by matthew edward

The Chicago Board of Trade revolutionized investing in 1993 with the introduction of its Volatility Index® (VIX® Index). It was the first benchmark index to measure the market’s expectation of future volatility and is now widely recognized as the world’s primary gauge of U.S. stock market volatility. Markets are subject to so many gyrations it’s no wonder the VIX became commonly known as the fear index.

I

ndeed, wild swings in the VIX has caused many an investor to have a sleepless night.

But for clients of Newtown, PA-based GWH Wealth Advisors LLP, there’s help for any bouts of investment insomnia. In fact, Michael Cice, CRPC®, MRFC® and senior partner at GWH Wealth Advisors, LLP, refers to his clients’ ability to withstand market volatility 62 / ADVISORS MAGAZINE

as their sleep factor.

“That may be oversimplifying it, but what we do is help them find a way to sleep at night,” he told Advisors Magazine in a recent interview. “Because what I think might be a good investment for me, if they can’t sleep at night worrying about what their money is doing, then it’s not the right investment for them.”

To provide clients with NOV 2020

peace of mind, Cice and his team first determine point A — or where a client is right now. Point B is where that client wants to be in three, five, or 10 years from point A. The advisors then set a course, or the right road for that client to get there.

“We operate a clientcentric service, and we place a significant emphasis on the client or his or her family and legacy interests,” Cice said. “We maintain a longterm view toward retirement planning and take on a basically holistic approach to the markets.”

Teamwork is vital at GWH Wealth Advisors, and Cice stressed that the firm’s core philosophy is built upon honesty, integrity and a commitment to serving the best interests of clients and handling every facet of the planning process.

“It is literally true that you can succeed best and quickest by helping others to succeed.”

– Napoleon Hill

Michael T. Cice, CRPC®, MRFC®

L/R: Michael T. Cice, Stephen Hill, Christopher Cice

“Being part of a CPA firm — an accounting firm — we don’t set investment minimums because basically we’ll reach out and do whatever is necessary for the clients of the CPA firm as well,” Cice said.

“That could be as small as helping them set up an IRA during tax season, or setting up a SEP for individual business owners, or whatever.”

Cice started working in the financial services industry part time as a junior and senior in college.

Almost 40 years later, he rebranded his company as GWH Wealth Advisors on January 1, 2020.

He knows well many of the financial literacy statistics from the National Endowment for Financial Education (NEFE.org), such as Americans holding a total of $1 trillion in credit card debt and that only 32 percent of U.S. families maintain a household budget.

“We use financial literacy and education as tools for empowerment, even understanding simple concepts such as cost averaging or compound interest, and taxes which can a make a big difference to financial outcomes,”

Cice explained. “This can be at home, with the children, and having a meaningful discussion at the family dinner table. We believe starting early and fostering a key sense of how money works and how to avoid costly mistakes later in life.”

The majority of GWH Wealth Advisors’ business is focused on tax-efficient retirement planning and distribution. The firm works to ensure not only that the dollars are accumulating in the most tax-efficient manner, but that distribution scenarios are defined to get the most out of current tax laws – and then transfer those assets to the next generation in the most tax-efficient manner.

Different generations also have different levels of financial understanding.

According to NEFE.org, millennial Americans have a median emergency savings of just $2,000, and only 24 percent of millennials demonstrate basic financial literacy.

Which is why Cice sees room for internet-based investment platforms, mobile apps and other tech-driven robo-advisors.

“I think that anything that

increases financial literacy and education is certainly a tool,” he said, with a nod to the allure of robo-advisors.

“As for the gaming nature of some of the platforms, I understand the intent behind the strategy is to attract younger investors and make investing more accessible,” Cice explained. “For some it may even seem far more enjoyable than to sit down in an office and discuss serious long-term investment planning. But my hope is that investors, younger folks in particular, will not allow graphics and special effects on these websites to keep them away from the serious nature of what they’re doing.”

He and the GWH Wealth Advisors team maintain that’s why it’s vital to establish a meaningful relationship with a trusted and capable financial services professional. Roboadvisors can have initial appeal, Cice agreed, but that doesn’t approach the benefit of having a financial professional — someone with a deep understanding of a person’s specific needs, goals and objectives in their corner to advise them

through life’s many peaks and valleys, and the markets’ many peaks and valleys, which is all critical to longterm success.

Whether young investors or more experienced, all should be highly fee conscious, according to Cice who’s a big proponent of industry change in the transparency arena.

“I think people need to better understand what investments they have, how they work, what it’s costing them and what it’s going to do for them,” he said. “Also, at what point are they going to change that investment?”

Cice is quick to acknowledge that no single investment is going to last a lifetime. He said mixing things up is good and there needs to be change. Clients should consider: once a goal or objective is achieved, what’s next? GWH Wealth Advisors helps every client to answer what’s next, Cice summarized — and selecting the proper investments at the right times allows them to better sleep at night.

For more information on GWH Wealth Advisors, LLP, visit: gwhwealth.com

ADVISORS MAGAZINE / 63

by amy armstrong

2020 SEES RISK MANAGEMENT ACTIVITY RISE Financial health amidst pandemic worries

It appears risk management is back in financial planning vogue. Investor concern regarding the impact of the COVID-19 pandemic on personal finance has created renewed interest regarding a topic that in a pre-coronavirus world was mundane to some.

A

recent “CNBC + Acorns Invest in You” survey reports that 75 percent of Americans admit not seeking any professional financial advice let alone thinking about how to protect their personal assets.

For financial advisors like Andrew Cashman, a former attorney who lives and breathes risk management, the questions his clients are currently asking on the subject are as invigorating as a double shot of espresso. The pandemicdriven trend represents a topic in which he is wellversed and highlights a professional passion.

As a Wealth Management Advisor with Cashman Dickerson Financial Planners based in Quincy, Illinois, Cashman told Advisors Magazine that his clients want to know if their assets are safe and if their portfolios can recover from stock market volatility. He sees clients taking a greater interest in how they can 64 / ADVISORS MAGAZINE

use financial vehicles to protect not just their money and investments, but also their lifestyle.

“Since mid-April – after the initial shock of the pandemic in late February and March – people are reaching out again and their minds aren’t so filled with anxiety, but instead with risk management,” Cashman said. “They want to learn more about using disability insurance and life insurance and in some cases, long-term care insurance. They seem to be more understanding that financial planning has to include that.”

Worry has not gone away.

Unofficially, one can see the worry in the eyes of masked shoppers; one can hear it in the limited conversations at the check-out stand; one can spot it when reading social media posts.

Officially, COVID-19’s impact on finances is documented in several recent surveys.

A “USA Today/Ipsos”

NOV 2020

survey indicates most people are more worried about their financial situation than they are about actually catching coronavirus. The National Endowment for Financial Education reports that nine out of ten surveyed say they are anxious regarding their finances because of COVID-19.

Interesting enough, that anxiety did not decrease in higher income

brackets. More people – more than half of all Americans – report they are dipping into their savings more than before the virus hit, according to a poll by LendEDU. But the financial news surrounding the pandemic isn’t all bad.

According to Bankrate, 52 percent of Americans stated they changed their spending habits within the first two weeks of

the pandemic and 66 percent of Americans did not pull their investment in the stock market as volatility soared.

Cashman strongly advised clients not to panic and make rash decisions based on the ups and downs of the market. And, he capitalized on their newfound willingness to talk about risk management. It is a

topic that garnered more of his attention after becoming affiliated with Northwestern Mutual.

“When I am not engaged in the risk management side of financial planning, I feel as if I am doing my clients a disservice,” Cashman said. “I feel that they are missing out on an essential part of financial planning without it.”

The same sentiment applies to tax-efficient planning.

Cashman said too many taxpayers only pay attention to the amount of taxes they will pay once a year – when it is tax deadline time. That’s not his version of tax planning.

“People need to be looking at reducing taxes over a lifetime, not just one year at a time,” he said. “Looking at being tax efficient in their retirement planning and using tools such as a Roth IRAs/401(k) s or whole life insurance to secure money in different buckets is an efficient option. But, unfortunately, not a lot of people know how to fully utilize those.”

As a finance major in college who then earned a law degree, Cashman has a unique perspective regarding money and planning. As a lawyer, he embraced tax law. He earned his master’s degree in taxation at Georgetown University and began his career as a tax planner with an accounting firm.

He worked as a corporate lawyer for 12 years, but the desire to be a financial planning professional was always nipping at his heels.

“The whole time I wanted to be a financial

advisor. I was always thinking about the possibility,” he said. Five years ago, that possibility became reality.

Education remains a key factor in Cashman’s professional life. He educates himself about his clients – their current situation, their aspirations, their wants, their needs and their resources – and he educates his clients regarding the making of financial choices, ensuring they know the “what” and the “why” of the choices being made to help secure their financial futures.

“Our process is always trying to educate ourselves on the client in regard to who they are, what makes them tick, what their goals are, and then educating the client on how we can better help them,” Cashman said. “Education is what sets us apart. It is our core value to make sure that clients understand all the different aspects of financial planning and how those operate together.”

To learn more about Cashman Dickerson Financial Planners, visit: cashmandickerson.com

Andrew Keith Cashman uses Cashman Dickerson Financial Planners as a marketing name for doing business as representatives of Northwestern Mutual. Cashman Dickerson Financial Planners is not a registered investment adviser, broker-dealer, insurance agency or federal savings bank.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI(NM) (life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries.

Investment advisory services provided as an Advisor of Northwestern Mutual Wealth Management Company®, Milwaukee, WI, a subsidiary of NM and a federal savings bank. Investment brokerage services provided as a Registered Representative of Northwestern Mutual Investment Services, LLC, a subsidiary of NM, broker-dealer, registered investment adviser and member FINRA and SIPC. Financial Representatives do not render tax advice. Consult with a tax professional for tax advice that is specific to your situation.

ADVISORS MAGAZINE / 65

COULD COVID KILL ENTREPRENEURSHIP? How To Make Sure It Doesn’t It’s no secret that the COVID-19 pandemic has left many existing small businesses struggling, and the continued economic uncertainty threatens to kill the ambitions of entrepreneurs who planned to launch new businesses but now must put their dreams on hold.

“This crisis will end up being much worse for small businesses than the 2008-11 sub-prime mortgage crisis,” says Andi Gray, president of Strategy Leaders, a business consulting firm.

“That 2008 crisis mostly hit banks, mortgage,insurance, automotive – all of which were primarily big, publicly owned stock companies.

The only small business 66 / ADVISORS MAGAZINE

NOV 2020

dominant category was the construction sector which was devastated for years.

Today’s crisis hits and potentially harms nearly every type of small business.

“During that 2008-2011 period, for the first time, the number of business starts fell below the number of business failures. In other words, more businesses were killed off than were

launched, and many people wondered whether we had killed entrepreneurship itself. It took five years or more for the small business community to recover from that. The COVID-19 pandemic impact is so much larger and deeper.”

And when small business takes a hit, the country as a whole suffers, she says.

“Small businesses make

up 50 percent of the gross-domestic product and also employ half the workforce,” Gray says.

“What happens to them determines what happens to the overall economy.

We as a country cannot afford to fail them.”So, what steps should small business owners take to make sure they come out on the other side of the current crisis in good shape? Gray suggests a few questions for them to consider: How is your online game? If business owners aren’t already thinking of themselves as all-virtual, e-commerce sellers, they need to be, Gray says.

“That’s how your customer of today and the future is going to want to buy and receive products and services,” she says. “You may need to update your website. Evaluate how good you are at social media communication and promotion. Rethink how you can get orders, track delivery, and receive payments virtually.”

What’s happened to banking and access to capital? In recessions, banks shut down their credit lines, and reduce capital access if they have any concerns about a customer’s ability to pay down debts on time, Gray says. “This will get worse before it gets better. That means you may wake up one morning to find your business is facing challenges with access to capital,” she says. “To keep your credit lines open and

approved, it’s essential that you put in the time and effort to work with your bank.” Without access to the proper amount of capital, she says, your business may not be able to function.

How have employees been affected? Businesses must be prepared for challenges that impact work production, Gray says. She points to a study

by Microsoft that showed employees’ brains are measurably more stressed working remotely than in an office. It’s harder for remote workers to process

information and they get fatigued more easily. “And that’s just one aspect of what our employees are dealing with as the world around them changes so rapidly and dramatically,” Gray says. Build in as many communication and interaction tools as possible.

Is your supply chain stable? “Get prepared for more disruptions as COVID continues to emerge

and reemerge and some vendors fall away,” Gray says.

“And with hurricane season followed by winter weather, many poorly funded state and local support structures could struggle." Look at how your supplies get to you. If you’re part of the supply chain, look at how you deliver supplies to your customers. “Explore alternate shipping solutions and routes – trains, planes, cars, trucks, boats,” Gray says. “Now is the time to investigate all of them. Build in redundancy.”

Staying in business is difficult even without a major crisis, Gray says, as three out of four businesses fail in every 10-year

cycle.

“The good news is that small business owners are known for being nimble, flexible, and resourceful,” she says. “Many of them are finding new opportunities by solving problems that didn’t exist, or weren’t priorities, at the start of 2020. If we can buy them some time, they’ll be able to retool, market their new services and products, and keep good people employed.”

ADVISORS MAGAZINE / 67

by joe innace

ASPIRATIONAL

Aligning Assets with Aspirations Financial advisors often say they are like health practitioners. While the latter specialize in fitness and health issues, the former focus on financial well-being and preparing clients for a future condition in which they can thrive.

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hysical therapists align muscles, tendons and bones — to get them in shape so a patient’s body functions properly.

They are similar to wealth advisors who align and tweak a client’s financial assets to put them in a place to provide for a client’s needs, desires, and aspirations.

Steven Wilkinson, Principal of Wilkinson Wealth Management, Oakland, CA, likes to talk about the concept of alignment, something he learned from his mother.

As a young physical therapist, Wilkinson’s mother established the Physical Therapy Department at Meharry Medical College, a Historically Black College, in Nashville, Tennessee, at a time when Polio was still a serious

TALK

threat to many. When it became known that this service was available in the Black community, a mom brought in her nine-yearold daughter whose legs had been ravaged by the Polio virus.

The little girl had braces on, and could not run or even walk very well. Steven’s mom started a regimen of PT, working with the girl and instructing the child’s family about what to do to make progress.

That girl’s name was Wilma Rudolph, who went on to win 3 gold medals and become one of the greatest U.S. track and field stars in Olympic history.

The lesson of Rudolph’s recovery is ingrained in Wilkinson.

“I know that when things are aligned, when they are in their

proper place, anything can be overcome and great things can be achieved.”

When your body, mind, and soul are aligned with your visions you feel clear and purposeful about your life. Happy in the moment and excited for the future.

You feel fulfilled and whole.

Your finances should be aligned to support this feeling.

Today, Wilkinson has instilled that inspiration and approach to his wealth management firm, which was founded in 2005, inspired by the passing of his mother that year.

He became interested in finance in junior high school

when his class launched a stock market competition and visited J.C. Bradford, a powerful regional investment banking firm, where one of the Principals was the father of a classmate.

That early experience cemented his interest in the financial industry and he later received a bachelor's degree in finance from the Kelley School of Business at Indiana University and an MBA from Harvard Business School. He is a registered representative and investment advisory representative with Western International Securities.

“I look for clients who want to reflect on their lives, their values and take action for their futures, who are looking for a firm of integrity, where they can trust, and value the personalized services that we can deliver,” Wilkinson said.

The firm minimum is $500,000 of investable assets, although sometimes clients can be building towards that amount, or they’re a family member of an existing client at Wilkinson Wealth Management.

As with a physical therapist, that initial assessment of one’s financial condition is critical. Wilkinson uses a discovery process that allows his firm to identify clients’ visions, values, aspirations, and goals. A risk profile is also determined and Investment return expectations are discussed and agreed upon. Post-discovery phase, Wilkinson and team will begin to educate clients, on the many variables within finance and

*

We believe in thinking “out of the box” and we are not afraid to challenge conventional wisdom in our approach to investing and preserving wealth. advance planning.

“We assess and present the things that are controllable, that when understood and focused on can increase certainty and reduce stress.,” he noted. “This can be about risk, time, return, and understanding your personal economic model. Some things you can’t control, but it’s important to understand what you can control.”

Wilkinson boils it down to a few personalized factors that enable clients to make good decisions. The discovery process leads to a customized plan, and then to an advanced planning stage that integrates several areas of finance, such as retirement, tax, and legacy planning, wealth transfer, and more.

“For retirement planning, the key questions are

around understanding the client’s cash flow,” he said.

“How are you going to fund your lifestyle and have an increasing income stream without compromising the lifestyle you want? We want to help ensure that the client’s lifestyle never suffers in the future,” Wilkinson emphasized. “We discuss the idea of risk and return, and inflation to determine what risk they are comfortable with and then we present various solutions to them and recommendations that will align all the elements.”

In the coming months there will be a lot of uncertainty in the political landscaped and new economic policies during a continued health crisis. The uncertainties of the times have driven the need and desire for financial advice to alltime highs. Preparing for these uncertainties are key in considering the proper place for your financial assets. You can’t control the weather but you can be prepared for it. Wilkinson Wealth Management is the compass that helps clients navigate the financial roads ahead to set expectations for the journey.”

For more information on Wilkinson Wealth Management, please visit: stevewilkinson.com

Securities and Investment Advisory Services offered through Western International Securities, Inc., Member FINRA/SIPC. Wilkinson Wealth Management and Western International Securities Inc. are separate entities.

ADVISORS MAGAZINE / 69

by joe innace

LITERACY TALK

INTERVIEW

Waking up to Financial Literacy Educating 'One Sip at a Time'

Expecting to launch in time for the holiday season, Bull & Bear Brew will allow you to order coffee – with a shot of financial literacy.

T

he brainchild of entrepreneur Jason Steele, who’s also founder and CEO of Weston Banks Wealth Partners in Raleigh, NC, Bull & Bear Brew is a fresh organic, fair trade financial literacy coffee brand.

“Our mission is to educate the next generation,” Steele recently told Advisors Magazine in an interview. “Put them in control of their finances, ‘one sip at a time’ (the coffee’s tagline). Young people weren’t learning or being taught the most basic stuff – saving, spending, budgeting.”

The idea came to Steele about five years ago. He went to a Starbucks® and there was nowhere to sit. He recalls that the popular gathering place was filled with people mostly under the age of 25 who had spent a lot on a latte, Frappucino® or Americano.

“While there, someone I knew asked me for a stock tip– knowing I was in the financial services business – and I jokingly

finances and investing.

“During the pandemic, I started to make something of this dream and to flush out the thought process,” he said. “The notion was to make something that you could drink and also make you a little more financially savvy, save a little more money and make better life decisions.”

The coffee brand, which can be ordered online (bullandbearbrew.com) merges different market investing terms with different tastes. Some examples are: Dead Cat Bounce, a medium roast; Black Monday, a bold roast, and Irrational Exuberance, a decaf. The bags and mugs have QR codes that can be scanned to provide a quick, 15to 30-second financial or life lesson along with a cup of coffee.

“Plus, with every bag someone buys, a portion of that will eventually go into their personal Bull and Bear savings account,” Steele explained. “We’re ready to launch in time for Christmas.”

Investing is a long-term process that requires a sound strategy and the discipline to stick with it. Let us show you how it’s done. said, ‘Starbucks, just look at this place.

Some of these kids need to buy shares of the company’s stock, because it might pay for their habit in dividends one day.’”

At that time, Steele hadn’t fully realized his idea for blending financial literacy with coffee. But over the years, his firm kept getting calls from college students and recent graduates wanting to learn about 70 / ADVISORS MAGAZINE

NOV 2020

Fact is, Steele wasn’t all that interested in stocks and bonds even when in college.

He was always interested in being an entrepreneur, but not necessarily a financial planner. After college he took a job selling Aflac® insurance and other benefit programs, but soon became bored with the limited scope of products. Still, he loved selling, and during a sales call to eastern

North Carolina he met his future mentor who was teaching about 401(k) plans and providing solutions to people. Impressed, Steele ended up joining the future mentor and staff at Morgan Keegan in Memphis, TN. “The joke was James Bond was the closest thing to what I thought a real bond was,” Steele chuckled. “I just didn’t understand anything.” But over the years he went for more intensive training, decided one day to make his own leap and founded Weston Banks Wealth Partners in 2010. His current credentials include Series 7, 63, 65, and Certified College Planning Specialist (CCPS™). Not wanting it to be all about him, the firm’s name reflects the middle

L/R: David Weiss, Ellen Martin, Heather Steele, Jason L. Steele

names of two of his three sons.

Today, the firm services about 150 households by providing holistic financial planning. The typical client has $2-3 million in assets. Their home is usually paid for, and most are business owners who might also own a beach house. Weston Banks Wealth Partners is affiliated with Prospera Financial Services, Inc., Member FINRA/ SIPC. “We’re pretty much referral-based,” Steele said. “We sit down as a team and interview prospective clients, to see if they fit our model and our process. We’re not a stock brokerage firm. We don’t pitch stocks over and over to make money.”

He added that the firm adheres to the belief that success means different things to different people. “For some, it’s about accumulating wealth, to others it’s about having enough to meet their family expenditure needs and obligations. For us, success is not just measured by what’s desirable, but what’s attainable,” he said.

Steele likes to talk about building the road to take a client to their destination.

But ever the entrepreneur, he takes that to the next level with his ‘Lessons From the Yellow Brick Road.’

“We use illustrations of the yellow brick road from the Wizard of Oz,” he explained.

“We depict the Tin Man, the Scarecrow

and Cowardly Lion, and we use those characters as analogies for the emotions around market volatility.”

A client’s own yellow brick road is discussed during meetings. “For example, the yellow brick could be retirement, which is Oz — or for someone who is already retired, their yellow brick road could be end of life expectancies and transferal of wealth,” Steele said.

Weston Banks Wealth Partners manages client assets and other wealth issues aligned with its philosophy – or FILLosophy, as Steele pointed out.

FILLosophy is an acronym for Financial Investing for Life and Legacy, he explained.

The idea is to FILL client lives with more than just money. The goal is to craft a plan that provides stability so clients feel confident about their financial plan, even in challenging markets.

“We share this FILLosophy in prospect meetings and emphasize it is not about picking stocks, there is so much more to it,” Steele said.

Financial education is one of the pillars of the firm, he insisted. “I want clients to know all the options on the table — the benefits and the pitfalls. A foundation in personal finance is critical,” Steele stressed.

And considering Americans consume more than 450 million cups of coffee each day according the National Coffee Association, a foundation in financial literacy could soon get a nice boost from Steele’s Bull & Bear Brew concept.

For more information about on Weston Banks Wealth Partners, visit: westonbanks.com

Securities and advisory services offered through Prospera Financial Services, Inc., Member Finra/SIPC

ADVISORS MAGAZINE / 71

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At Wood Financial Group, our mission is to improve your lives by developing smart financial strategies for your financial independence. By utilizing investment strategies that have stood the test of multiple investment cycles, we customize financial plans that fit your long-term goals. Knowing that your hard- earned capital is the root for sound financial growth, we take our role as your trusted advisor seriously. We are honored to partner with you in managing your resources. We are committed to providing you the service and personal attention that will enable you to pursue your financial goals. As fiduciaries, we put you and your needs first.

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Danny Prestage, a registered representative, offers securities through Triad Advisors, LLC. Member FINRA & SIPC. Wesley Wood, Rachel Biggerstaff and Danny Prestage (Investment Advisor Representatives) offer Investment advisory services through Key Capital Management, Inc. Key Capital Management, Inc. and Wood Financial Group are not affiliated with Triad Advisors, LLC.

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