It's been tough being a financial advisor these past few years with markets moving in a herky-jerky manner, sometimes by more than 3% in a day. That of course caused phones to ring off the hook with clients clamoring, sometimes to get in, sometimes to get out.
Through it all, Fred Greene, an advisor at Woodforest Bank in The Woodlands, Texas, got used to ups and downs. In fact, his ups and downs are even more frequent than the market's.
Greene, who took flying lessons as a college student and started his working life as an airplane salesman for Piper Aircraft, still flies and spends many of his weekends piloting "mercy flights" for a not-for-profit organization that ferries patients and family members to cancer treatment centers. "It's a way to have fun flying, and to do good at the same time," says Greene. "And it's great for me. When you fly, you can't think about the markets and all the other [stuff].... And when you hear what these people are going through, like the parents I flew to Houston to be with their son who was having his leg amputated above the knee because of bone cancer, the market falling 400 points is nothing!"
Greene's association with small planes and flying played a key role in getting him into the financial advising business. After several years at Piper, the market for airplanes nosedived. "President Reagan eliminated the investment tax credit for private planes and our sales went from 92 planes to eight planes a year overnight," he says.
Out of a job, he was waiting to hear from a headhunter when he found himself talking with the Merrill Lynch broker who had sold him a mutual fund. The fund had tanked, he says, but the broker, hearing that he was looking for work, suggested that he work for Merrill Lynch.
"I told him I didn't know anything about being a broker," recalls Greene, "but he said it didn't matter. Merrill Lynch would teach me." And the broker added, "'Besides, you're used to talking to wealthy people and you're used to asking for real money."
So in 1983, Greene went to work at Merrill Lynch, later moving to Rotan Mosle, a unit of PaineWebber, where he had a job as a manager. "I brought most of my Merrill Lynch clients with me, but didn't add many," he says, "because PaineWebber had a restriction on how many clients a branch manager could have. They didn't want it to look like you were competing with the other brokers."
In 1988, he left Rotan Mosle, becoming a financial advisor at Woodforest Bank, where he is a certified investment management analyst. "I'm out of management now," he says, sounding happy about the change. "I just deal with clients. I've got three branches, all within a mile of each other, and about 150 to 200 clients, with 650 accounts."
Greene says he tries to aim for accounts of $500,000 or more, but says that because he is working at a bank, "it's hard to set any minimum size. We have to accept anyone who is referred to us by the bank." His clients range from people with perhaps $25,000 in savings to one client who has $140 million, $90 million of which is his to manage.
"When I first came here in 1988, I was doing a lot of cold calls to grow my business," says Greene, "but after a while it became more a matter of referrals from the bank but mostly from clients who would refer friends and acquaintances. Because once people see how you serve them, they start saying, when someone they know complains about their own investments or broker, 'Hey, call Fred if you're not happy with your guy!'"
Greene says, "The trick in this business is to work with the client to find out what they have today and what structure they need to build their portfolio in a way that achieves as close to their goal as we can get within their risk tolerance. If we do our job right, they don't panic out when the market gyrates like it's been doing."
This past year, Greene says he's been putting as least half of his client assets into tax-free bonds, because, as he puts it, "You never have to say you're sorry." (Even the recent record $4 billion bankruptcy of Jefferson County, Ala. doesn't trouble Greene, who says it is at most a problem for Alabama muni bonds.)
"Meredith Whitney is a sweetheart, but she was wrong when she predicted a collapse in the muni bond market," says Greene. "Last spring, when people were dumping municipal bonds, we were buying them as fast as we could. I literally ran out of money to buy tax-free bonds with!"
Weren't his clients worried? "People said to me, 'What if she's right?' But I said, "Come on, even in the Great Depression only two percent of bonds were in default. And what if she's wrong?' Now I look like a genius!" He adds, "If you can get 4.5% to 5% on tax-free bonds, that's equivalent to 6.5% to 7% on a taxable bond, and if you can get those kind of deals, why the heck would you buy equities?"
Actually, Greene says he felt particularly confident because in his bond buying he focussed on Texas bonds-particularly school district bonds, which in Texas are backed by the Permanent School Fund, which, in turn, is funded by oil and gas royalties paid to the state. "Unless you believe oil and gas are going to go to zero, that Permanent School Fund will not run out of money, so these bonds will never be at risk," he says.
Now with prices less favorable in the overall muni market, Greene is turning to dividend stocks and convertibles, and to high-yield bonds.
His tax-free bond strategy has certainly worked out for clients. He tells of one man, born in 1933 and now retired, who came in to see him on a client referral in 2000 with $850,000 to invest. "He was a hard sell, but we set him up with an income piece in his portfolio and put the rest in growth. A decade later, the guy has $519,000 in bonds and $261,000 in equities and over that time he has taken out $379,000 in income." Greene says the overall return on the portfolio over the period has been 6.68% per year, versus 3.47% for the S&P 500 Index.
While Greene clearly loves his work as a financial advisor, he makes it clear that flying remains his first love. He particularly enjoys his volunteer work flying mercy flights for Grace Flight. "These are all people who don't have the resources to travel back and forth to the cancer center," he says, noting that he frequently finds himself flying from an airport in Conroe, Texas, to pick people up or deliver them to cities as far away as Kansas City and St. Louis. "I have actually never gotten a client out of this flying," he says. "What these people want to talk about on a flight is what they are going through, whether it's their own treatment or a relative's."
He says, "Doing this for me is kind of a philosophical thing. These flights get you out of all the day-to-day reality we financial advisors deal with and give you a chance to clear your head."
Name: Fred Greene
Bank: Woodforest National Bank
Location: Woodlands, Texas
TPM: Raymond James
2010 production: $996,000
2009 production: $875,000
2010 AUM: $210 million
2009 AUM: $225 million
No. of branches: 3
No. of clients: 175