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Goal-Oriented
Investing
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Advisors
help clients gain financial security.
By Kevin Kipp
A man who has a million dollars,” John Jacob Astor said, “is as
well off as if he were rich.”
He died in 1848.
If you’re squeaking by with a seven-figure net worth these days,
don’t despair: Someone will help you invest your meager wherewithal.
That someone’s company probably started as a bank, an insurance
company, or a brokerage house.
Peter Schick is president of Moneta Group, St. Louis’ largest
independent financial planning firm (and according to Schwab Institutional,
the largest in the Midwest). Schick said his organization started
in 1905 as an insurance and employee benefits company. They made
a transition in the mid-’70s.
“Our core business is comprehensive financial planning,” he says.
“That is essentially looking at all areas of the client’s financial
life: money management, investment planning, estate planning,
retirement objectives, insurance planning, tax planning.”
An action in any one area affects every other area, he says. Thus,
an otherwise sound investment can have negative estate or income
tax consequences.
Moneta’s 25 principals are all technically oriented, Schick says:
“That’s the uniqueness of our firm. Among us we have something
like 70 professional designations. Most have two or three.”
The designations include CPAs, certified financial planners, attorneys,
and chartered financial analyst (what Schick calls “the Ph.D.
of investment analysis”).
Moneta has more than $3 billion of assets under management. Their
target is “the affluent market, which we define as $1 million
of investable assets and up,” Schick says. Typically, clients’
net worth starts around $3 or $4 million.
“The advantage to comprehensive planning,” Schick says, “is that
you have a roadmap for success as you define it, whether that’s
financial independence, or a second home, or retiring at 55. Our
job is to help clients ferret out what that is and then design
a roadmap to attain it.”
Don Boschert, one of 6,600 Edward Jones investment representatives,
as well as a regional leader for St. Charles, Lincoln, and West
St. Louis Counties, says he and his colleagues also provide financial
planning services.
“It comes down to being a genuinely full service broker,” he says.
“That’s what we call ourselves. It’s important that we are what
we say. We have to look at the whole picture to adequately advise
our clients.”
Even discount brokers offer mutual funds, stocks and bonds. Edward
Jones also brings to the table FDIC-insured CDs, annuities and
insurance products to assist in estate planning, succession planning,
charitable remainder trusts, irrevocable life insurance trusts.
“We are financial planners, and basically it’s free. It allows
us to establish a better relationship with the client. Then when
we do business with them we get paid fairly. If they don’t like
our ideas, they don’t pay anything.”
In 20 years, Boschert had only one client abscond with his research
and strategic advice, and execute it with discount vendors.
Edward Jones also offers car loans, mortgages, and free checking.
Is this a bank?
Boschert says, “We were prohibited from selling those products,
and it wasn’t just Glass-Steagall. Everybody was pretty much segregated
into his own field.”
But as globalization began to put American financial institutions
at a competitive disadvantage, legislatively imposed firewalls
began to erode.
Rick Yust, regional president AXA Advisors LLC, agreed that the
Glass-Steagall Banking Act of 1933 had prevented the consolidation
of financial services.
But now, his view of consolidation is that “the Europeans seem
to have the capital to buy American companies. They get access
to markets, distribution, sales force, product and expertise.
Americans really do excel at this.”
Besides Paris-based AXA Financial Inc.’s purchase of Equitable
in 1991, Yust cited Swiss bank UBS’s purchase of Paine Weber.
Yust expects the market eventually to be dominated by 15 to 20
major players.
AXA appears likely to march in that number. They have the largest
credentialed sales force in the U.S. At $750 billion, they are
second only to Fidelity in funds under management.
Their target market is “families and individuals earning $75,000-and-up
a year, as well as businesses and corporations of any size,” Yust
says
“What separates us is that when we engage in financial planning,
we can’t discuss product until we complete the entire process
of understanding our clients’ needs, risk tolerance and goals,”
he says. “Then we can determine what kind of product is advantageous
to their situations. Some planners are selling product in their
first meeting.”
The parent company is of such size that when Yust talks about
“product,” he names franchise subsidiaries: Donaldson Lufkin Jenrette,
Alliance Capital, Equitable Life Assurance Society of the U.S.,
Pershing, and DLJ Direct.
AXA Advisors’ 7,400 credentialed associates may not be enough
to handle coming demand. Yust points out “Future legislation [privatizing
retirement policy] appears to include the prospect of individuals
managing more of their own money, and looking for guidance.”
Besides policy and legislation, Paul Vogel, president of Enterprise
Financial Advisors and Enterprise Trust, believes increased prosperity
has increased demand for holistic answers to money questions.
(Judging from the alphabet soup after his name, Vogel increased
prosperity at several universities: CPA, MBA, JD, LLM. For some
masochists, apparently, one law degree is not enough.)
“There are those who know exactly what they want to buy in the
market,” Vogel says. “They want to follow stocks like they follow
the Cardinals. Anyone can give them an avenue to the market.”
But Vogel’s client is often “a business owner who has sold his
or her business, or is looking to sell his or her business, or
a professional looking to develop a retirement plan.
“They don’t want to—or don’t have time to—learn about every stock
they might want to buy,” he says. “They know what their goals
are. They usually want to be comfortable with strategy to achieve
them with as little risk as possible. That’s where we as financial
advisors become a means to an end.”
His clients include doctors, lawyers, and recently a batch of
real estate developers.
Vogel continues, “We spend most of the time on the front end to
determine their goals and circumstances.” They consider retirement
sufficiency, tolerance for risk, estate and succession planning,
and so forth.
Then Vogel (or one of his five professional colleagues) and the
client develop a financial action plan, and an asset allocation
model: so much large cap, so much small cap, some international,
some bonds, parsley, sage, rosemary and thyme.
“Our approach is to find the best investment or product at the
most competitive price. There’s an entire world of money managers,
insurance products, and mutual funds. That objectivity is one
of our biggest distinctions.”
With somewhat more than $300 million under management, Enterprise
Financial Advisors might be the guppy in this story. But with
a minimum net worth of more than half a million dollars, perhaps
someday their clients will be as well off as if they were rich.
Kevin Kipp runs Bubble Communications, a creative services
and community relations firm in St. Charles.
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