Some two decades ago, Annette Martin was working as an administrative assistant at a retirement home in Lancaster County, Pa. Recalling those days, she says she met a lot of people who simply were not financially prepared for retirement. "It was a really nice place, with independent living facilities.... but it was pretty pricey," she says. "People would have to prove they had the assets, and many would come up short."
Some of those who came up short, however, could have had enough with proper planning. It was sad to see, she said, but it also inspired her to seek out a new chapter in her career.
She waited until her children were grown (she has six, plus eight grandchildren). But then she began to look for a new career that would allow her to help such people. Her choice: financial advisor.
She started by working in insurance sales for Mutual of New York, spending four years there. Then she moved to Fulton Financial, a community bank based in her hometown of Lancaster.
She's been at the bank now for 15 years. "You see the same kinds of problems today as I saw at the retirement community," she says. Only now, she notes, there are many more people dealing with a lack of financial preparedness."
Martin's approach as an advisor has been fairly consistent over the years, she says. "I spend a tremendous amount of time profiling my clients to see what their needs are. Then we look at three buckets of money-short, medium and long-term-and figure out what we need to do to fill them."
She adds, "I try to keep it all as basic as possible, whether I'm dealing with younger people just beginning to think about saving for retirement, people nearing retirement, or those who are already retired."
Basically, she said, it comes down to discovering what people's goals are and what it will take to achieve them. "I stay within a client's risk parameters. If someone is a balanced investor, I'll put them into growth mutual funds and fixed-income, but there's no set ratio of equity and fixed-income I use. We could be 70% to 80% growth and 20% to 30% fixed-income at one point, but then more heavily in fixed- income if the market changes," she explains.
Lately, however, there has been a major change in her practice and, as a result, a change in her relationships with clients: a shift to much more fee-based business.
Five years ago, her bank changed broker-dealers, leaving PrimeVest (now Cetera) for Raymond James, she says. Just before the switch, PrimeVest had been talking to its advisors about doing more fee-based business and Martin took that to heart with the move over to Raymond James.
The first year, she says, was difficult. "My production went down about 50%," she says, "and so I gave myself three years to try it and see where I was."
As it turned out, she was in a good place by then. "Every year since that first one production has grown," she says. "In 2010, it was $521,000. By 2012 it was $900,000, and last year it was $1.2 million."
Moreover, by the end of 2013, her fee-based business accounted for nearly half her production. Bottom line: "It was a good idea to shift over to a more fee-based practice."
Besides having significantly better production numbers, her income is much more predictable, she says.
"Back in 2008, before I was doing any fee-based business, there was a lot of panic. Now, with my fee-based clients, even when the market goes down, I don't get many of those frantic phone calls. People understand that with a managed account they have diversification and flexibility, so they don't read something bad in the paper and then think, 'Gee, I should have shifted my assets last week.'"
In shifting a client to a more fee-based relationship, the first thing she considers is asset size.
"As a bank-based advisor, I have to serve everyone, but you really need to have at least $100,000 in investable assets in order to build a diversified portfolio," she says. "With at least that much money to work with, we can build a portfolio that's appropriate to the needs, desires and risk preference of the client."
With her fee-based clients, Martin says she has time to really get to know them. "I end up focusing on a smaller group of clients, and giving them much more personal service," she says. Spending that extra time, she adds, also helps her to uncover more client assets.
She has high praise for Raymond James' Goal Planning and Monitoring financial planning software, which she says makes it easy to demonstrate visually to clients how slight adjustments in their wants and needs can produce significant differences in how a client or a client couple live in retirement. Using those tools can also help her discover and pry loose client assets not currently being handed over to her to manage.
"Sometimes people don't even remember things they own," she says, "like an old IRA held somewhere. And there is often money that is invested in some other place that they aren't initially telling me about."
For example, she cites a bank referral she got recently. "The person had a maturing CD that they hadn't tracked in years, and rates were going down. We started with that money, which I invested for the client. As this person felt more comfortable with me, we dug a little deeper. I asked one day if he had any investments elsewhere, and he said, 'Yeah, I have an old 401(k) and an IRA.' All that money was then brought over to us," she says. "This kind of situation is very common."
As her fee-business has grown, the source of her new clients has shifted too, with fewer new people coming from in-bank referrals, and more coming from referrals by existing clients. Typically, those client referrals are people who aren't already banking with Fulton Financial, though many, once they become her clients, will become bank customers too.
Typically with her fee-based clients, Martin says a bank product will be used for holding short-term money. "Then I look at managed money as the middle bucket, for assets that we don't plan to use for four to five years. That would be for things like a new roof or a new car that we want to pay for without having to pay some penalty....and we might use an annuity for long-term income. So we are achieving all the client's goals with fee-based products."
Not all clients with significant assets want a fee-based account. "It doesn't work for someone who doesn't want any market fluctuation," she explains. "Some older people especially don't want any risk at all. They're happy earning 1% on their money and having no risk. Sometimes, I can show them the advantage of taking some of their money and putting it in to a fee-based product" And if they still show no interest? "I'm ok with that, as long as I've explained the alternative to them."
As to her bank, she says, "They say it's my practice, and if I do what's best for the client, they're happy. They don't tell me how to do it. I'm the one who develops a relationship with the clients and their children, but being fee-based works to the bank's advantage because that deeper relationship I have with my clients also is a relationship they have with the bank."
Toward that end she says she tries to include bank personnel in her client meetings, particularly when someone in the bank has referred a client. "It's good for them and it's good for me to do that," she says, adding that clients like the idea too.
Looking forward to the rest of 2014, Martin says, "I think we're going to have a strong year, though not as strong as 2013. I'm sure there will be bumps in the road, but if I work to set clients' expectations realistically, I shouldn't have those panic calls."
Her hope is that her clients will all be able to afford the retirement that they dreamed of having, and that they don't come up short like some of the people who used to apply to the retirement community where she used to work.
Name: Annette Martin
Bank: Fulton Financial Corp.
Location: Lancaster, Pennsylvania
TPM: Raymond James
2013 production: $1.2 million
2012 production: $900,000
2013 AUM: $128 million
2012 AUM: $109.5 million