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Business Week January 2007 Made for the Cookie Cutter Mold?
Or are you Unique? "The customer can have any color he wants so long as it's black." –Henry Ford regarding the color of Model T’s It seems that whenever expensive luxury items are redesigned for mass production it becomes more about the bottom line and less about the whole experience. For Henry Ford, the bottom line was about getting people to buy his cars. For the financial services industry the concept is the same but it looks different -- it is about getting more assets under management. Not long ago investing in stocks and bonds was something only wealthy people did and as you might suspect they were very well catered to. However, since the advent of the IRA and the 401(k) plan, the percentage of people investing has risen dramatically. So the financial services industry has redesigned and mass produced Mutual Funds, Separately Managed Accounts (SMA’s) and Variable Annuities. These products are sold in many shapes and sizes but the bottom line remains “getting assets under management” and “sacrifice personal service”. These are fine products but several studies have shown that the average investor during the mega bull market of the 1990’s was lucky to out perform the market indexes. Why? The answer is that individual investors without the guidance of professional advice let their emotions and inexperience get the best of them and ultimately their investments didn’t perform as well as they should. Working with an independent fee based investment advisor shifts the focus from asset aggregation for the company’s sake to financial well being of the individual investor. Independent advisors are free to focus on truly knowing their client and developing a relationship. This relationship is the key to long term financial success because when it comes time to make hard decisions you want to be consulting with a trusted advisor and not with a financial product merchant. Article was continued on www.Financial-Resoucre.com (afiliatied with Business Week) You’re on your own! If you’re finally leaving work life with, say, $500,000 or perhaps you received that from the passing of a parent or a divorce settlement, this is your nest egg. But how do you make it grow? How do you make sure it produces the income you need now and in the future. Mutual funds? Separately managed accounts? Variable Annuities? These are products. They are not customized for you and they are not necessarily going to grow your funds – or even preserve their value. Why? Because each is layered with fees, tax expenses and commissions that eat into their value. They will eat up on average 1.25% to as high as 3.00%. So where – other than under your mattress -- do you put your nest egg? If you walk into one of the big investment firms or a major regional securities firm, they may excel in money management, but not for you. They are not interested in accounts your size. Hand your $500,000 over and for sure they’ll put you in a product or a commingled portfolio, or maybe into a product with a new zingy name that sounds like it’s customized. Believe me, it’s a product, not your personal money manager who is buying stocks to fulfill your current needs and provide for your future. You’re probably thinking. “I know I need a money manager but with only $500,000 or even a $1 million, where can I go?” There are money management firms for accounts of half million dollars. We, at Rosenblum, Silverman, Sutton, SF Inc. are one such firm. Based in San Francisco, we are a woman-owned firm with $250 million in assets under management. We have 200 families as clients, mostly living in San Francisco, the greater Bay Area, Palm Springs, Palm Beach, LA, but many also in Denver, Minneapolis, Detroit, Chicago, Philadelphia, New York, Seattle, Eugene, Oregon. Our clients are families, single men and women, gays and lesbians, divorcees, widows, people with special problems and just ordinary folks. We have three generations --clients, clients’ children and clients’ grandchildren. They send us pictures from vacations – skiing, horseback riding – weddings. We put the pictures in an album, which is on the table in our conference room. It gets thicker by the day. For each, we’ve developed a custom equity or balanced portfolio with individual securities. We analyze each client’s needs, which includes risk tolerance, whether they work or not, how they want to live. We don’t profit on commissions, we have no incentive to push them into and out of stocks. We hold their hands, organizing their portfolios of stocks and bonds and assembling a team of personal finance experts. When they need it we will introduce them to an estate-planning attorney, elder law attorney, CPA, and an insurance broker who will negotiate for the best deal for them We have shopped for a mortgage for a client, or gone out to look for an apartment with a client. How do clients find us? Word of mouth, friends and the network of CPAs and attorneys and other investment advisors. But also through referrals. Some of the largest discount brokerage firms refer clients to us through highly accredited programs. For people who want and need day-to-day attention.
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