Why Did You Start Your Firm?
Over the last few decades we’ve seen a shifting paradigm with personal finances and investing. People are dealing with much more complex personal finance issues than they have in the past. I think too many financial services companies and firms use an out-dated business model with their clients - there is too much emphasis on selling. I just don’t believe that a sales environment is well-suited for providing people with the kind of financial advice they need these days. I started my firm because I thought I could better serve people by removing myself from the sales function and concentrating entirely on providing quality, objective advice.
What Is Your Philosphy?
I think it’s straightforward and sensible. At times the market can be a real distraction - it can keep people from doing some other important things that can help them become more successful. We keep our clients focused on sensible investment strategies, but at the same time we help prepare them for managing personal finances and making more informed financial decisions.
A few years ago after a presentation, a very nice woman came up to me and mentioned that I had failed to explain why people should trust me with their money. I responded by asking her why she, or anyone else, would accept or settle for a verbal explanation. I mean, how can anyone hold themselves out to be trustworthy without first earning someone’s trust? This is true with personal relationships – right? When a financial adviser initiates a discussion to explain why they believe you should trust them with your money – it comes with an expectation – an expectation that they should be trusted before they’ve actually proved they’re trustworthy. I think that’s unfair and somewhat disingenuous, particularly when you consider what’s possibly at stake – someone’s life savings. Trust is something to be earned over time through actions and behavior – not through words. A good adviser knows this - and they know that they’ll have plenty of opportunities to earn their client’s trust.
We hear so many financial services companies and financial advisers use the word “trust” in advertising or in discussions with their clients. What are your thoughts on establishing trust?
In your view, what are the benefits of working with independent firms like S & A Financial Strategies & Services, LLC?
Most people know very little about the independent firms – particular the ones that are fee only. The prevailing view is that all financial services organizations operate the same way, have the same types of advisers and do the same kind of things – this just isn’t the case.
Many financial services firms have ties or relationships with other brokers, banks or insurance companies. This could mean their financial advisers may either be limited in their choice of products, or receive additional compensation for recommending a particular brand. We believe operating independently gives us more freedom to make the right choices for our clients - the ones we feel are best. For instance we can choose from a much broader spectrum of investment products and make more comparisons – and more comparisons benefit our clients. Also many other firms and organizations employ advisers who are compensated through commissions and bonuses – so they are really operating as salespeople. As a fee only firm, we are paid only through fees received from our clients. This means we don’t sell anything and can subsequently focus solely on providing unbiased advice. Our clients benefit from a true one-on-one relationship – not a one-on-three, or one-on-four that they may get while working with someone else. We also believe our clients have a greater opportunity to receive more personal attention.
Describe Successful Investing.
Success can mean different things to different people, but when it comes to investing success is achieved within the framework of real life goals – clear and distinct. For instance if you determined that you needed x amount of dollars annually during retirement and you took the time to prepare a sensible investment plan that got you there - then you’ve succeeded.
What kind of individuals or families could benefit from working with your firm?
Anyone who hates the feeling of being unprepared – people looking to treat personal finances and investing as a top priority.
What are your thoughts on how investing and personal finance have evolved over the years?
Things were a lot simpler a few decades ago. Back then pensions were more common, so many people weren’t really exposed to investing. If you were fortunate enough to own an investment account, it was probably comprised of a few stock and perhaps some bonds. Social Security retirement benefits were also pretty much a sure thing.
After a while we started to witness a paradigm shift - particularly with the evolution of employer sponsored retirement accounts. Many companies decided that they no longer wanted to bear the investment risk of traditional pension plans and starting moving toward profit sharing plans like 401(k)s. This shifted the investing responsibility (and risk) from the employer to the employee, and most people were not ready for that. There were other dynamics as well. We saw the advent of IRAs, traditional and Roth, and other more complex retirement sponsored programs as well. Retirement account rules and legislation also became more complex - and more taxation issues came into play. We also saw an explosion of investment products which created an overwhelming number of choices for investors. Along with this, the financial services industry began to grow and the lines of demarcation between brokers, banks, and insurance companies became more blurry. We even started to see some accounting and law firms offer some financial planning and investment services. But too many of these companies and firms still approach their clients through the old and antiquated business model – one based on selling (like the stock-broker years before). This simply doesn’t address the public’s need for advice with more complex personal finance issues. I think this has created some real challenges for people looking for assistance with their personal finances and investments.
What do you enjoy about your work?
I think everyone wants to find something that they can be passionate about, something that after a hard day’s work they can look forward to starting up again the next morning – that’s certainly the way I feel. I really enjoy helping people and the work we do is extremely meaningful because it has a direct impact on the lives of our clients and their families. That’s a huge responsibility and requires honesty, integrity and a real sense of what’s fair and what isn’t – core principles that I feel very passionate about. I’m also analytical and enjoy solving problems, and the whole area of personal finances and the market certainly provide plenty of opportunities to apply these skill sets. But I think what I’ve enjoyed the most is some of the relationships I’ve developed through the years. You’re dealing with individuals and families on a very intimate level - they’re literally bringing you into their personal lives