exclusive interview with
Capitalizing on Bill Gatesâ€™ Vision Realizing a Forgotten Dream
New Fed Chair MUM
Janet Yellen Heads the Fed
Federal Reserve Tappering Uncertain Times
Solar Energy Efficiency
A New Energy Source in The World
Built for the road ahead. Designed for living. Engineered to last. Vertrek Crossover w/ Fordâ€™s Kinetic Design
Eco-Boost Engine Hybrid Regenerative Braking w/ Auto-Stop-Start Technology
ADVISORS ISSUE 59 | MARCH 2014
Publisher Erwin E. Kantor Managing Editor Michael Gordon Editor in Chief Helen Moss Editorial Robert Jordan Lisa Walker Sean Goldstein Staff Writers L. A. Rivera Monica Link Wendy Connick David Gordon Diane Alter A. Marie Velthuizen Judy Magness Maria Esposito Rich Monetti Edwin Camacho Peter Hocstein John Travis Taylor Amy Armstrong Annabelle Preston Asst. Art Director Marienne Hilahan Illustrators Shafali R. Anand Mike Moss Jonny Hawkins Paul Kales Marketing / Advertising Monica Link Sean Rome For subscription details, contact: firstname.lastname@example.org For advertising inquiries, contact: email@example.com
Economics Of Gender Politics & Business
ew Fed Chair remains tight-lipped on being the first woman to lead Federal Reserve. Yet, Janet Yellen, ultimately will become one of the most powerful women in the world — an extraordinary achievement for the Brooklyn born New Yorker. It’s too early in the game of politics to have any discussion about gender and breaking the glass ceilings in corporate America. The Yale graduate has her nose to the grindstone today; expect great things from this American economist. Certainly, Yellen’s gift to connect economic theory to universal life has been one of the unique qualities of her profession. Our cover story this issue tackles the complexities of the digital technology. Serial entrepreneur Sheldon Laube has maximized on Microsoft founder Bill Gates concept. He has rolled out a free mobile app with over 50,000 images— renowned paintings by Monet, Da Vinci, and Van Gogh, along with thousands of works by modern-day artists. The app syncs up with Internet-connected TVs and can display the pieces on the screen when it’s not being used. On page 12, our reporter Amy M. Armstrong, reports on the effects of
Federal Reserve’s tapering still seem uncertain. The market has entered the final month of fiscal Q1 2014, and the impact of the U.S. Federal Reserve’s move to shrink its monthly purchase of bonds via the Quantitative Easing Program has been a mixed blessing. Consumers interest in mobile personal health monitoring devices has spiked over the past year. Nick Warnock, an entrepreneur and former finalist of the Apprentice has invented a time piece and health monitor dubbed the Wellograph which will hit the market soon in March. And finally we take a look at a story which focuses on Solar Power and Solar Energy. This March, I hope our reader’s enjoy Saint Patrick’s Day.
Erwin Kantor Erwin Kantor, Publisher
Feb / March 2014
exclusive interview with
Capitalizing on Bill Gates’ Vision Realizing a Forgotten Dream
New Fed Chair MUM
Janet Yellen Heads the Fed
Federal Reserve Tappering Uncertain Times
Solar Energy Efficiency
A New Energy Source in The World
New Fed Chair MUM
Janet Yellen is the first woman to head the Federal Reserve, but don’t expect the gender discussion to go any further than that. She has remained completely silent regarding that aspect of her role as chair of the national monetary policy maker.
BUSINESS / FINANCE FEATURES
Federal Reserve’s Tapering
As the markets enter the final month of fiscal Q1 2014, the impact of the U.S. Federal Reserve’s move to taper or reduce its monthly purchase of bonds via the Quantitative Easing program...
Mobile Health Device from Former TV Apprentice
Consumer interest in mobile personal health monitoring devices has tripled in the past year, as indicated by research from the Consumer Electronics Association (CEA) and reported at the end of 2013 by Information Week.
A True Financial Journey
Educated Clients and Transparent Leasing Terms
Authentic Financial Advice
Gains Footprint in Corporate America
Clearing Up Medicare Confusion
Wise Sustainable Wealth Management
Sitrin Capital Portfolio Management
Build a Business / Merrimak
Colorado Capital Management Inc
How Bill Gates’ Failed 1990s Art Project is Seeding New Startups in 2014. Serial Entrepreneur Sheldon Laube Launches Artkick
Solar Energy that is Aesthetic And Efficient
Solar energy is the cleanest and most abundant renewable energy source in the world. It’s also the earth’s oldest energy form.
ADVISORS MAGAZINE - MARCH 2014
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Its’ a Perfect Fit Finding Capital for Middle Market Companies
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BUSINESS / FINANCE
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Local Boy Values Bostonâ€™s Middle Market Commercial Real Estate
68 SeaCrest Wealth Management A Customized, Conservative Culture
TECHNOLOGY & HEALTH
70 Amperand, Ltd.
WANT A REVOLUTION? Here Comes the Biotechnology Revolution
71 Heroix Corp.
Big Failure Leads to Big Success
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Great Promotional Product Boost Brand Recognition
73 ICI Insurance
Clients not Customers - Relationship not Price Clients
74 Health Capital Consultants
Providing Solutions in an Era of Healthcare Reform
76 Midwest Healthcare Management
Errors Abound Fixing the Thorny Issues of Medical Billing
77 Cacace, Tusch & Santagata
Taking on the Problems From the Routine to the Extremely Challenging
78 The Comstock Law Firm, PLLC
Bringing Personal Legal Help to Small Business
THE SUIT MAGAZINE p.7
by amy m. armstrong
NEW FED CHAIR MUM on Being the First Woman to Lead Financial Agency Janet Yellen is the first woman to head the Federal Reserve, but don’t expect the gender discussion to go any further than that. She has remained completely silent regarding that aspect of her role as chair of the national monetary policy maker. According to the Washington Post, she refused to comment on that detail for a Sunday feature published the day before she took the helm on Feb. 3, 2014. In Aug. 2013 when everyone else was aghast that President Obama mistakenly referred to her as “Mr. Yellen” in a press conference outlining potential candidates to replace outgoing chair Ben S. Bernanke, Yellen said nothing publicly. She also is apparently confident enough in herself as a woman to not be consumed by the dictates of style mandating a different ADVISORS MAGAZINE - MARCH 2014
outfit for different public appearances. Washington fashionistas and even Roll Call, which usually keeps its focus on the political side of politics, were quick to point out that Yellen wore the same outfit to her confirmation hearing and nomination ceremony less than a month apart. Again, Yellen, unlike the hordes of bloggers coming to her defense, was silent. In reality, one could suspect Yellen’s second wearing of what in photos appears to be a tasteful, professional black suit really represents less in terms of whether she keeps track of fashion’s rule and perhaps more a signal of the economic climate we all live in: Wearing an outfit twice is not a crime; it’s a frugal example in a time when our nation is paying for its previous excess. If she wears that black suit when she presides for the first time as chair over the March 18-19 meeting in Washing-
ton, D.C. of the Federal Open Market Committee – the Fed’s monetary policy making body – she might just be silently sending a message. Perhaps that message is something along the lines that this nation’s economy is facing bigger issues than her wardrobe choices. It is when she is slated to present a summary of economic projections and actually hold a press conference, according to the Fed’s website. Maybe by wearing that black suit she’d be saying that she plans to continue in the same no nonsense path that has steered her career for the past four decades. It is a good-looking suit and we believe it is American made. One would expect an American tailored product to withstand more than one wearing and washing. In 2013, Forbes made her #72 on its list of the World’s Most Powerful People. The list came out in late October
– just shortly after her nomination but before the Senate banking committee approved it and forwarded to the full Senate just before the Christmas holiday. On Jan. 6th, 2014, the Senate approved her by a 56 to 26 vote. The Forbes ranking seemed inconsistent with the fact that she was set to head up one of the world’s most influential financial agencies. Forbes editors explain on the magazine’s website that list is put together based on the scope of influence and financial resources each list maker has relative to their peers. Seriously? Her predecessor was ranked #7 and I bet he wears the same suit more than once. Yellen’s other number has been the #2 spot at the Fed since 2010 when she took over as vice chair. In this role, she’s been an outspoken advocate pushing the Fed to take a stronger role in reducing unemployment even it means sparking higher inflation rates to make that happen. From her comments at her White House nomination, it shouldn’t come as a surprise if Yellen uses her new extend-
ed sphere of influence to push this goal. “The mandate of the Federal Reserve is to serve all the American people. Too many Americans still can’t find a job and worry how they’ll pay their bills and provide for their families,” she said. “The Federal Reserve can help if it does its job effectively.” That issue - instead of whether she wears the same suit more than once - ought to be how she’s judged in her new role. The Suit Magazine would love to see her wear that suit again to the FOMC in mid March. It sets an example of getting the most bang out of ones clothing budget. Besides she looks classy in that black suit. I totally dare her to do it: Wear that suit! Author’s note: This opinion piece was written Amy M. Armstrong and in no way reflects the opinion of the magazine’s ownership. Armstrong’s other work for The Suit Magazine includes profile writing in which she has no opinion. She lives in Alaska where notable fashion statements occur only when matching hats and gloves are worn. Lol.
What Other Economists Expect From Yellen While economic analysts predict the Federal Reserve’s monetary policy under the leadership of Janet Yellen who took the helm after Ben S. Bernanke’s departure in early Feb. 2014 will be similar, there are some notable changes to watch for. Yellen is a strong advocate of rules based approaches in determining what appropriate monetary policy is, according to a paper jointly written by Erik S. Weisman, a fixed income portfolio manager, and Robert Spector, an institutional portfolio manager, with MFS Investment Management. MFS is a global asset manager with nine offices spread across five continents with a strong grip on the pulse of how American economic development affects the rest of the world. Its U.S. location is in Boston. Weisman and Spector anticipate Yellen to move away
from the long-standing Taylor rule under which inflation and unemployment are given equal rating in determining the adjustment of short term interest rates. Yellen,the pair propose in the Nov. 2013 paper, “What to Expect From Fed Chair Yellen” published in MPS’ Investment Insight newsletter, will give unemployment a double rating in making determinations. The pair expect this move from Yellen in part because bringing down the unemployment rate has been the mantra of her tenure as vice chair of the Fed since 2010. It’s a thought echoed by Michael Hirsh of the National Journal based in Washington, D.C. “No one feels this more intensely than Yellen, who understands not just the human cost to individual lives and families but also the damage that a demoralized workforce can ADVISORS MAGAZINE p.9
Organization of the Federal Reserve System A diagram showing the organization of the Federal Reserve System. 4 April 2013 Author Kimse84
do to the economy as a whole,” Hirsh wrote in an lengthy magazine-style article analyzing the impact Yellen’s tenure as head of the Federal Reserve may have on politics as usual in Washington, D.C., but more importantly on the financial future of Main Street America. He noted her congressional testimony that joblessness is the issue of the moment. “We can expect to see her focus on the employment issue in a way that I don’t think we have seen a Federal Reserve chairman do for a while,” Hirsh told the PBS Newshour hosed by Judy Woodruff on Jan. 7, 2014 – just one day after Yellen’s Senate confirmation. “Their economic thinking is enormously influential, not just in Washington, but around the world. This is the most important economic job in the world and it’s said to be the second most important job in Washington, after the president. So I think her four-year term, during that time, we’re going to see a lot of testimony, a lot of discussions with Congress that are going to shape perhaps some new thinking on unemployment.” Yellen most certainly will take a much more hands-on approach to regulating banking and Wall Street’s trading activities. Her predecessor, Bernanke, left much more of the day-in-day-out discussion and policy-making to governors within the Federal Reserve – most notably Daniel Tarullo, according to Hirsh with whom Yellen has already fought turf wars. Hirsh writes that Tarullo was given full license by Bernanke to crack down, but instead treaded too lightly for Yellen’s liking. Hirsh expects Yellen will reiterate Bernanke’s marching orders in her own language laying down specific expectations for Tarullo’s work within the banking industry. Hirsh also expects Yellen to increase direct interADVISORS MAGAZINE - MARCH 2014
action with officials at the U.S. Treasury Department including pushing Secretary Jacob Lew to add more guidance to the Dodd-Frank law. And while she might be seen as cracking the whip on Tarullo, she has also in her short tenure as Fed chair provided him with unquestionable support in his efforts to regulate shadow banking. Yellen represents another significant difference from so many of the previous chairs of the Fed. She doesn’t come from Wall Street, as Hirsh points out. In fact, as noted by economist John Kwoka at Northeastern University in Boston, Yellen is a “rara avis” or a rare bird on the Washington, D.C., financial management scene in that her professional career has been utterly detached from Wall Street. Kwoka told The Brown Daily Herald at Yellen’s alma mater shortly after Yellen was nominated, “Her nomination is particularly welcome since her expertise is on the very issues facing the U.S. and global economies – employment and growth.” As it currently stands, Yellen remains committed to Bernanke’s use of “forward guidance.” It’s a financial term Bernanke introduced in Dec. 2012 when he announced that the Fed would not raise interest rates until the unemployment rate fell below 6.5 percent as long as the inflation rate did not go higher than 2.5 percent. It’s a policy holder over from the Bernanke tenure that Weisman and Spector expect to remain in place for an extended time period under Yellen’s leadership the promise of steady long-term interest rates is expected to calm jittery investors as the Yellen Fed continues Bernanke’s plan to reduce the monthly Quantitative Easing purchases of US Treasury bonds.
by amy m. armstrong
Effect of Federal Reserve’s Tapering Still Uncertain
s the markets enter the final month of fiscal Q1 2014, the impact of the U.S. Federal Reserve’s move to taper or reduce its monthly purchase of bonds via the Quantitative Easing program has been a mixed bag. That’s not exactly what forecasters expected. Interest rates did not skyrocket in Dec. 2013 as previously speculated when the Federal Open Market Committee – the Federal Reserve’s monetary policymaking body – announced it would go forward with the first $10 billion tapering of QE bringing its then monthly purchases of U.S. Treasury bonds down to $75 billion for Jan. 2014. Interest rates didn’t jump either in late January 2014 when the FOMC again decided to cut its purchasing by another
ADVISORS MAGAZINE - MARCH 2014
$10 billion for Feb. – essentially shaving off a quarter of the program in less than two months. That’s the pretty picture; the one that is in focus. In the other picture that is still developing, Wall Street is awfully unpredictable when it comes to its reaction to QE cuts. During early trading on Jan. 29 – the day the FOMC made an afternoon announcement of continued cuts – the Dow Jones Industrial average fell just short of 134 point. Even though that is close to only one percent of its entire trading, it is still significant. Compare that downward reaction to what happened on Dec. 18 when the first taper was announced. By the close of trading at 4 p.m. that day, the Dow was up just shy of 293 points or about 1.5 percent. That positive
outcome – labeled an embrace of the taper by CNN Money – was not what forecasters expected. In mid-May 2013 when then Fed chair Ben S. Bernanke announced the FOMC was “considering” the beginning of a taper, the market had the equivalent of financial toddler tantrum. With a couple short weeks as uncertainty increased, the Dow dropped below 15,000 – a mentally significant number to Wall Street professionals – and remained there often throughout the summer posting several multi-day losing streaks. By the end of May 2013, 30-year mortgage rates climbed 17 basis points. “What struck me when Bernanke first announced the Fed was considering taper was the immediate reaction in the markets. Big jump interest rates by a full percentage point in two weeks. Yet nothing had been done yet,” commented Dean Baker, co-director at the Center for Economic and Policy Research in Washington, D.C. “When the Fed actually did say in December that it would begin the first ta-
per, nothing happened.” Baker suspects the panic beginning in May and last throughout the summer could be more attributed to human behavior rather than economic conditions. “When people began to anticipate the taper is when they actually reacted,” he noted. “When the taper began, there really wasn’t much of a reaction. Perhaps between May and December, everyone was used to the idea.” This latest round of QE, which began in Sept. 2012, is dubbed QE3. However, it isn’t the third time the Fed has taken significant action to bolster the U.S. economy. The first action – called “Operation Twist” in honor of the dance fad of the era – came about in 1961. At that time, the Fed exercised open market option to sell short-term public debt and reinvest it in longer options. In 1979, the “Saturday Night Special” increased the federal fund rate on overnight borrowings between banks and other entities to maintain their bank reserves at the Feder-
al Reserve by a full percentage rate over the first weekend in October. It caused some U.S. Treasury bonds to be defaulted and the Dow dropped 64 points in two days. QE1 between Dec. 2008 and March 2010 started with a plan of purchasing $600 billion in government agency mortgage-backed securities. It ended with the Fed owning more than $2.1 trillion. Under QE2, the Fed used a different approach purchasing $600 billion of long-term U.S. Treasury products between Nov. 2010 and June 2011. Three months later in Sept. 2011, the Fed revamped the 1961 Operation Twist with its $400 billion purchase of bonds with maturity dates from six to 30 years while selling off all bonds with maturity dates less than three years as had occurred 40 years previously. It was indeed a twist – the original maneuver in 1961 was believed to have not met its objective. The Fed revived “twist” after one of its economist based in San Francisco – Eric Swanson – reexamined the original plan recommending another goaround with a few tweaks including the maturity dates. Enter QE3, which began Sept. 2012, and the Fed’s plan to exit this market-bolstering strategy. To Baker, all the discussion of the effects of this latest round of QE might be a big hurray over little impact. For instance, QE3 most likely kept 30-year mortgage rates from making an additional half-percentage point increase, he believes. That does not create a huge boom in new home purchases, but it does give existing homeowners some leeway to refinance and free up some cash for other purchasing or debt service. “People are exaggerating on the positive and the negative,” said Baker.
ADVISORS MAGAZINE p.13
Perennial Entrepreneur: Sheldon Laube
Launches Artkick Picking up where Bill Gates left off in the 1980s Serial entrepreneur Sheldon Laube, the former PricewaterhouseCooper CIO, and current CEO of ArtKick has made his presence known as one of the new Silicon Valley startups in California. And he’s making a lot of noise in the corporate world. “I have been an entrepreneur my whole life,” Laube says from his office in San Franciso. “Artkick is my fifth startup and my first was a consulting company in my college dorm room way back then,” he added, “While in college I applied for a summer job as a programmer, but no one wanted to hire me. So, I started my own company and hired myself and that’s where it all started.” Today, the lean-bearded-40-year-old looks more like a Talmudic scholar in the tech industry with stints as Pac’s first chief innovation officer and Novell’s former CTO. Now he’s at the helm of one of Silicon Valley’s most promising young art-tech startups. It all started back in the 1980s, just beADVISORS MAGAZINE - MARCH 2014
fore the dot.com period, when Microsoft founder Bill Gates created a first-of-itskind 22-foot “video wall” in his Seattle home. From the on-set, it featured thousands of digitized images of fine art and classic photographs. In fact, Gates spent millions crafting the world’s largest and most impressive digital art library. Why was Bill Gates unsuccessful with his idea 25-years-ago? First, there were no high definition or flat screen TVs. They didn’t exist. Gates wanted to display high quality art, but had to buy commercial studio monitors. Those cost tens of thousands of dollars. Second, there were few high-speed Internet connections in American households. Gates had to build a whole server farm in his house in order to host 100 im-
ages. The technology of the day wasn’t ready for Gates’ vision. He faced the same problem George Lucas had when he tried to produce Star Wars. However, the technology wasn’t there, yet. Thus, his efforts largely remained unrealized outside of his personal home. In 1989, Gates established a profit-making business. However, Interactive Home Systems failed to sustain a strong presence in the market place. The company eventually morphed into Corbis Corp., one of the world’s major licensor’s of photos, footage and other media. “It’s an interesting story,” Laube explained. “I didn’t even make the connection to what Gates had done, even though I sort of knew about it. But it was a completely independent thought,”
Artkick organizes and formats the images and then makes them available for your selection. Control Artkick from your SmartDevice–think of it as an intelligent remote control. Large, stunning images are displayed on your TV.
he added, while pausing in between sentences. “Just goes to show you that Gates was a great visionary with brilliant ideas way back then.” His success is very much a family affair. In fact, Laube’s wife as it turns out, is a fine arts photographer, whom sold her art outdoors at fairs during the summers in the Silicon Valley. People would flock and pay hundreds of dollars to have her photos in their home. “My wife at the time was thinking about to expand her business, because standing in booths at fairs for days was tiring,” added the tech industry veteran. While attending a lecture at the San Francisco Museum of Modern Art there was a panel of art handlers who were discussing the idea of collecting photography and art. “The discussions were very depressing,” he said with a chuckle. At that moment, a light bulb went off. “How do we bring fine art to the people rather than the people to the art?” From that befuddling question Artkick came to fruition---a cutting edge progressive digital technology company. Not bad for a serial entrepreneur. Laube said that the new state-of-the-art technology includes the “proliferation of mobile apps low-cost Smart TVs, and high-tech tools such as Roku,” which
will catapult Artkick to new heights. “The free app with more than 50,000 images which includes such artist as Monet, Van Gogh and Picasso can be made available on Artkick,” Laube said. “We will offer subscriptions and we will share the money with the artists.” He acknowledges that copyright issues will be handled fairly from a corporate prospective. “Copyright is very clear,” Laube continues, “All art falls in the public domain in the United States. Especially, an artist who has passed 7080 years or more.” But Laube admits that it has been a long, tough journey between then and now. He says he has worked on multiple startups and dedicated two long stints at PricewaterhouseCoopers as a big corporate executive. As an entrepreneur and engineer, he enjoys building “cool things for people.” “I was the first CIO of innovation at PricewaterCoopers in the dawn of the PC era and it was tremendously exciting, but after a decade, I went to being a startup guy,” Laube said. He helped found a company called USweb which was the world’s largest Internet consulting firm during the Internet boom. That company grew from five people to 2,500 in more than
23 countries in fewer than 25 months. Laube also helped develop another company called Centerbeam, that provided outsource IT services for small to mid-size businesses. Then Laube ended up back at PwC got another seven years. After leaving PwC roughly 18-months later, and taking a hiatus, Laube had an idea. And he literary couldn’t shake it. That’s how Artkick was born. Today, Laube now hopes to make a dent in digital technology. “’We’re here to put a dent in the universe. Otherwise why else even be here.’ That’s a quote from Steve Jobs. I’m here to help people be a part of that, giving them the opportunity to make a difference,” he added, “That’s what I try to model my professional life on. I motivate people. I get them excited about this vision and get them to be a part of changing the world in a small way.” Laube’s biggest strength is vision building in corporate America, helping people especially entrepreneurs, work for startups, so they can rock the world, very similar to what Gates did with the personal computer. “Gates is aware of our concept. Actually, I sent him a note. The note said, ‘I am bringing your vision to life,’” Laube admits.
ADVISORS MAGAZINE p.15
by amy m. armstrong
onsumer interest in mobile personal health monitoring devices has tripled in the past year, as indicated by research from the Consumer Electronics Association (CEA) and reported at the end of 2013 by Information Week. In 2012, the CEA reported only three percent of consumers as showing any interest in purchasing a mobile device capable of providing personal health information. That number jumped to 13 percent in 2013. The Pew Research Internet Project’s Dec. 2013 Health Fact Sheet echoes that same upward spike regarding interest in mobile health information. It includes 2012 data showing that 31 percent of cell phone owners indicated they used their phone to look up health or medical information – more than double the number of the previous two years, when only 17 percent reported doing so. This emerging trend is good news for Nick Warnock, an entrepreneur who has several irons in the fire of today’s technology marketplace. He made his first indelible mark on pop culture and the technology world in 2004 as one of the top four finishers during the first season of NBC’s “The Apprentice,” featuring Donald Trump. Warnock’s latest invention is part timepiece, part activity logger and part health monitor, called the Wellograph, due to hit the online marketplace during the third week of March 2014. “This is not just a watch to tell time or look cool,” Warnock explains. “This is a watch to tell time, look cool and give the user relevant health information. This device gives you a complete picture of your health. But unlike other devices that track activity or provide health information, this fits into any environment. You
ADVISORS MAGAZINE - MARCH 2014
Nick Warnock, Finalist of The Apprentice creates Mobile Health Device
can wear it to work, to the gym, to happy hour or to dinner.” The Wellograph – expected to retail at $320.00 – offers a wide range of features that go well beyond the initial check-in at your doctor’s office. While being worn, its built-in heart rate sensor and 9-axis motion sensor tracks maximum, average and minimum heart rate information, along with the number of steps taken by the wearer and the number of calories being burned. The device syncs with Bluetooth and with a smart phone app called The Wellograph App for weekly and daily reports charting your fitness progress (or lack thereof) and how much time your heart rate spent in the various zones – rest, light, fat burn, aerobic, anaerobic and max – that fitness experts typically track. Users simply input their age, height and weight, and the Wellograph tracks the rest. Made from a combination of stainless steel, sapphire crystal and aluminum, it weighs in at 3.52 ounces and runs on lithium batteries. In full-monitoring mode, a complete charge lasts two weeks: In watch-only mode, a full charge can last up to four months. The Wellograph has a 1.65 by 1.30 inch footprint and is a half inch thick. It is also water resistant to depths of 45 feet. Warnock does not take full credit for development of the watch, crediting instead his partner, Sarasin Booppanon from Thailand, as being the genius behind many inventions, including the Wellograph. After The Donald told Warnock, “You’re fired!” in one of those famous reality TV board room scenes, the duo formed a company called Atiz, which has introduced a number of different inventions. Warnock didn’t take The Donald’s tone and finger pointing personally. Instead, he took to heart the lessons he said he learned by being one of the first 16 apprentices in the high-pressure environment of “The Apprentice.” It required stamina to accomplish numerous daily tasks during the two months of filming, even while the spectacular “firings” were occurring every three days. “He was very nice to me,” Warnock recalls. “I learned that I can compete with the best of them out there. I figured if
I can take two and half hours of grilling from The Donald and his staff, then I can take two and half hours of grilling from anyone in the business world. I learned that I work very well under pressure.” Warnock took these lessons and applied them when Booppanon approached him with an idea for an automatic page-turning book scanning device. Forgoing an offer from the Oakland Raiders to market their luxury Oakland Coliseum suites, Warnock returned to his pre-Apprentice roots in selling, except with a significant twist. This time he was working just as diligently but instead it was as co-CEO of Atiz with Booppanon. In Jan. 2006, the pair introduced BookDrive, an automatic page-turning scanner and by May of that year, their second product – BookDrive DIY, a manual book scanner – was on the market. In October, the pair was given the National Innovation Award from Thailand’s National Innovation Agency. The following year, Atiz released a portable scanner called BookSnap, and in 2008, BookDrive Pro came online as a mass digitization model for professionals. In 2009, Atiz won the Red Herring 100 North America Award, which is a technology industry recognition highlighting top startups from Asia, Europe and the Americas. While the Wellograph is a product developed by the same partnership of Warnock and Booppanon, it is not an Atiz product. The watch/activity tracker/health monitor is being marketed under a new firm called Wellograph Co., Ltd. According to Warnock, the watch will be available at Wellograph’s website as well as on Amazon, with pre-orders beginning the third week of March. “My goal is for this to become a household name,” Warnock said. “I want everybody to know about Wellograph – about this wellness watch. Right now what I am really focused on is seeing it on the street; seeing people wearing it and utilizing its benefits.” www.wellograph.com www.atiz.com
ADVISORS MAGAZINE p.17
VION Receivable Investments, headquartered in Atlanta, Georgia, is an international provider of receivable investment services to businesses managing consumer and commercial receivables. VION provides a single, comprehensive source of expertise in commercial receivable factoring and consumer receivable purchasing, valuations, and process consulting.
VION Receivable Investments 400 Interstate North Parkway Suite 800 Atlanta, GA 30339 877.845.5242 phone 678.815.1557 fax Mesquite Corporate Center 14646 N. Kierland Blvd. Suite 122 Scottsdale, AZ 85254 480.729.6419 phone 866.260.1826 fax 123 North College Avenue Suite 210B Fort Collins, CO 80524 877.845.5242 phone 970.672.8714 fax 11921 Freedom Drive Suite 550 Reston,VA 20190 703.736.8336 phone VION Advisory Services 18017 Chatsworth Street Suite 28 Granada Hills, CA 91344 818.216.9882 phone 818.891.8738 fax VION Europa Paseo de la Castellana 95-15 (Torre Europa) Madrid 28046 Espanha +34 91 418 50 88 phone www.vioneuropa.es
R E C E I VABL E
THE SUIT MAGAZINE - DEC / JAN 2014
Atlanta • Phoenix • Fort Collins • Reston • Los Angeles • Madrid
INV E S T ME NTS
by diane e. alter
Focusing Solar Power Solar Energy that is Aesthetic And Efficient
olar energy is the cleanest and most abundant renewable energy source in the world. It’s also the earth’s oldest energy form. Throughout the last couple of decades, cutting-edge technology has changed the way we’re able to harness this energy for uses that run the gamut from providing light to generating electricity to heating water. Undeniably, the solar market faces challenges. Chief among them are getting individuals interested in solar energy and proving to potential clients that the sun’s source is affordable, efficient and visually appealing. As a result, the industry is racing to scale the production of solar technology while also driving down manufacturing and installation costs. Competition is heating up, bringing with it more and better options. Without question, the solar industry is chock full of lucrative opportunities and possibilities. Underscoring the industry’s profitable and social promise, the demand for solar electric energy has grown by an average 30 percent annually over
the last two decades, helped by declining costs, improvements in solar cell effectiveness, growing environmental concerns and monetary incentives. In 2009, the photovoltaic (PV) solar industry bought in global revenues of $38.5 billion, according to data from leading solar market research firm, Solarbuzz. Projections have the global PV market raking in $96.8 billion in 2014. Amid mounting interest and demand, the solar energy industry continues to explore ways to make photovoltaic panels more efficient and discreet. Presently, panels in place for high power usage are large, intrusive and must be placed in direct contact with the sun at all times. That means they need to constantly track the sun’s position using expensive sensors. Then there are the ever-changing and often unrelenting weather patterns that can impede a PV panel’s use. Coming up with a groundbreaking, game-changing way to overcome those issues, and aiming to alter the way we look at solar energy, is Andre Broessel. This passionate and genius
German architect has created Rawlemon – a revolutionary, innovative and most advanced solar technology that “squeezes more juice out of the sun.” Broessel explained to The Suit, “For more than 40 years, the industry has been turning the sun’s energy into electrical and heating power. But in general, solar PV panels have a performance of just 15 percent or less. So I developed Rawlemon, a focusing solar ball lens that can outperform solar panels by concentrating the light many thousands of times. A built-in optical tracking system that follows the sun across the sky helps make the Rawlemon up to 70% more efficient than a typical solar panel. It’s so efficient that you can even harvest energy from the moon or the sunlight on a cloudy day.” While unique in solar power, ball lenses are commonly and effectively used as a coupling tool in laser-based applications, endoscopes and bar-code scanners. By day, the Rawlemon system can be installed as a building skin to produce energy. By night, the sysADVISORS MAGAZINE p.19
tem can work as a multimedia energy support. The brilliant idea for the Rawlemon glass solar generator came to Broessel in a kind of “ah-ha” moment while he watched his young daughter playing with translucent glass marbles. As she innocently held her marbles in the sunlight, Broessel had an epiphany. Seeing what the marbles did with the light, he realized that if he could concentrate sunlight, thus multiplying its impact on solar cells, it could have a huge impact. With that revelation, Broessel setoff to create Rawlemon. Rawlemon actually resembles a massive, marvelous marble. The system is a stunningly beautiful orb that uses a large spherical glass lens to collect diffuse light from myriad angles. Broessel’s aim in the design process was to balance energy consumption while also combining aesthetics, efficiency and autonomy. And he has succeeded: This may be history in the making. Hundreds of thousands of fans were quick to share pictures of the giant Rawlemon transparent sphere via social media in the weeks following its debut late last year. “We knew the world loved our product after one Facebook page posted a photo of our Rawlemon sphere with the caption ‘this glass marble concentrates sunlight and moonlight at 10,000x and converts it into usable energy’ and it got 100,000 likes, 25,000 shares and 2,000 comments in less than 24 hours,” ADVISORS MAGAZINE - MARCH 2014
Broessel said. Rawlemon also delighted judges at the prestigious World Technology Networks Awards in November 2013. Going head to head with the most pioneering people and organizations in the world of science and technology, Broessel’s Rawlemon snagged a prestigious third place, behind only AT&T’s Telstar communications satellites and solar manufacturing giant BrightSouce Additionally garnering a great deal of buzz is Broessel’s Evil Genius Power Phone. Known as the beta.ey, this smaller version of the Rawlemon uses an acrylic ball lens that directs sunlight onto a PV cell-mounted moving platform to track the direction of light beams as the sun moves throughout the day. The device stores charges in its battery, can charge a smartphone or other devices via a USB port and emits a glow from its LED at night. It’s beautiful, functional and simply brilliant. Broessel just wrapped up a campaign on Indiegogo, an international crowd-funding platform, in an attempt to not just raise money for the Rawlemon patent, but to also raise awareness and
get people really excited about this thrilling development in solar power. Technical problems on Indiegogo and mishaps with overseas press releases thwarted earlier fund raising efforts. But after a recent Broessel interview and Rawlemon article hit a popular German news site, attracting more views than the biggest news story of the day – Broessel jubilantly reported he reached his funding goal on Indiegogo. “Next step is the production of our Evil Genius Power Phone Beta.ey and other pipeline products,” Broessel shared in a tone flecked with infectious energy. “We need to demonstrate that our technology is efficient. Our final goal is our MicroTrack Module for building integration. This will be the revolution in the energy field: autonomous buildings empowered with our transparent power generators. It’s our vision. We did the first step of it…” Broessel’s hope is not simply that his solar cell systems will better the way we harness the sun’s energy and change the way we charge our smartphones, tablets and desktops. His goal is much bigger – with big social implications. Broessel’s mission is to make solar power an applied and affordable solution in parts of globe where any electricity currently remains out of reach. His dream is to see the system installed in remote places around the world where people don’t have access to clean energy, or any energy for that matter. To be sure, Broessel is working hard to shine a sunny light on the important things that truly matter in the world. Great ideas come from great people – like Andre Broessel.
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by diane e. alter
A TRUE FINANCIAL JOURNEY
ast yearâ€™s stock market gains were ones for the record books. The Dow Jones Industrial Average rose 29.65 percent, hitting 52 record highs in 2013. The broad-based Standard & Poorâ€™s 500 Index soared 32.39 percent, the small cap Russell roared ahead by 38.82 percent and the tech-heavy Nasdaq Composite Index surged 40.12 percent. Precious metals lost their luster, with gold tumbling 28.65 percent, down for the first time in 13 years. Silver was even more tarnished, shedding 36.63 percent. Those hefty gains and losses left scores of investors both elated and confused. Perusing portfolios, many are adamant about holding on to sizable gains and not sure what their next move should be.
ADVISORS MAGAZINE - MARCH 2014
“It’s not about the next hottest stock, sector or IPO,” Marcus J. Sitrin, Principal of Sitrin Capital Portfolio Management, told The Suit. “It’s the entire process that matters and makes a difference.” Indeed, Sitrin has been making a difference in investors’ lives for decades. While the Century City, CAbased firm is relatively new – established in 2012 – it has already amassed some $350 million under management. And the founding Sitrin boasts more than three decades of investment experience, beginning his career at Merrill Lynch and rising through the ranks to senior vice president and senior portfolio manager in Merrill Lynch’s personal investment advisory program. In the wake of the 2008 financial crisis, Sitrin recognized the public was no longer enamored by large investment houses. In fact, he saw it becoming quite the opposite. “Wall Street’s biggest brokerage firms suffered severe black eyes and their reputations have forever been altered. Investment clients, no matter how much money they have, have increasingly become more comfortable with boutique firms. Most niche firms, like Sitrin, maintain a fiduciary responsibility (managing assets for the sole benefit of a client) unlike giant wire houses where brokers have a sales responsibility,” Sitrin explained. Acknowledging the undeniably uphill, paper-laden, time intensive battle he went through in moving from Wall Street to Main Street, Sitrin said that the advantages of moving far outweighed the disadvantages. Being super selective in its client base is one distinct and lucrative benefit. “We look for clients whose needs match what we offer. Our clients are long-term, conservative investors who are seeking an alternative to today’s low savings rate environment with a minimal pick/up in risk. We have found this kind of discerning client base has the highest rate of longstanding success. Our aim is to grow investments while closely monitoring risk so that clients have a financially secure retirement “Sitrin explained. The relationship begins by getting to know clients and their goals, and then establishing an open and honest rapport. Making sure the firm has a clear picture of clients’ current financial landscape and future
“It’s not about the next hot stock. It’s the process that makes the difference.”
objectives,Sitrin sets out to establish a carefully curated and customized portfolio made up of a combination of large cap stocks and investment grade bonds. The firm takes an active management approach, replacing portfolio holdings as needed to stay in line with clients’ investment goals and risk tolerance. Regular communication is a priority. “There is nothing more rewarding than helping a client achieve a financially comfortable retirement. That has to be among my greatest rewards and is what brings me the most job satisfaction,” Sitrin shared. While many investors like to believe they are smart and savvy enough to manage their own funds, studies show that this simply is not the case. To be sure, the Great Recession, together with a number of highly publicized scandals, convinced many to shun advisers entirely. According to a recent Deloitte consulting firm poll, 57 percent of respondents said that they are very content to handle their own financial planning. Moreover, 38 percent feel that they need no professional planning advice. Yet the truth of the matter is that most people don’t have the acumen, time or desire to effectively manage their money in today’s complex financial environment. Most people need a financial pro, and even the ones who don’t are smart enough to use one. Qualified financial planners are adept at dealing with and navigating a wide variety of financial topics, including everything from budgeting to savings to sound investing to how every financial decision affects an individual’s taxes and goals. Plus, these money pros help clients stick to their avowed priorities. Hiring a reputable financial portfolio manager like Sitrin is key. While all aspects of financial planning are important the return one garners from the portfolio is the key driver of success. That is what Sitrin has and should continue to bring to the table. “Despite last year’s stellar equity rally, people remain skittish about investing. At Sitrin, we not only monitor and manage their assets, we also educate clients on the risks and rewards of investing. Our investment strategy positions our clients’ portfolios for the necessary return with the minimum amount of risk. We can’t predict the future, but we can plan for it. Clients successes are our successes,” Sitrin added. When asked about his own great success in such a short period of time, a modest Sitrin told The Suit that he isn’t really comfortable “tooting his own horn.” But we are.
www.sitrincapital.com ADVISORS MAGAZINE p.23
by annabelle preston
Educated Clients and
Transparent Leasing Terms Build a Business
ncreasing demands from clients seeking greater transparency in leasing contracts is something Mary Kariotis, CEO of Merrimak Capital Company – an independent leasing firm based in Novato, CA – said that she welcomes. As reported in the magazine World Leasing News, the financial meltdown of 2007 through 2009 caused a significant credit crunch and lack of liquidity in the leasing market. Customers leasing equipment soon began to carefully scrutinize balance sheets and business practices within the leasing industry in an effort to control their costs. It's a trend continuing today, and it is a trend Kariotis views as beneficial to her industry. “Our industry is unregulated, ADVISORS MAGAZINE - MARCH 2014
which is really interesting, because we are loaning capital,” Kariotis said. “I am surprised it has never been regulated.” This, of course, leaves the door wide open for abuses. “For instance,” Kariotis said, “A customer signing up for a 36-month lease who does not thoroughly read a contract might be surprised to discover the length of the lease is actually 37 months, due to interim rent collected prior to the lease commencement.” Or, a client not accurately checking accounts payable might discover that their company was still paying rent on equipment that had already been removed or sold but due to a lack of inhouse communication, accounts payable simply kept paying the monthly fee. It has happened. Not to Kariotis, and not to any of the clients under her watch. But she has heard these sad stories. “Customers are becoming
more experienced,” she said. “They are demanding more disclosure. Our approach has always been to have full disclosure and make the customer aware of all the financial terms of any lease that we originate.” And she isn’t kidding, either. The firm’s online presence features an extensive customer education section outlining the meaning of leasing terms. Kariotis wants educated customers. “Our job is to support our clients internal career path,” she explained. “We don’t want a customer to sign up for financial terms that they really don’t understand. If they sign for terms they don’t understand, leaving their company with financial obligations down the road, what you end up doing is inhibiting that individual’s chance of being promoted and growing within their organization. They will be perceived as not doing a good job because they signed up for leases that were not correctly budgeted or a contract that has unexpected expenses. We don’t want that type of experience. The more educated a customer is about leasing, the more successful Merrimak will be.” Taking an approach that combines customer education with contract transparency is what Kariotis said has put Merrimak on track for nearly doubling its revenues every year for the past five consecutive years. The firm’s mainstay leasing is in information technology equipment and materials handling equipment – with these two segments comprising approximately 40 percent each of the firm’s annual originations. The other 20 percent of business is originated from fitness, manufacturing and medical equipment.
by diane e. alter
AUTHENTIC FINANCIAL ADVICE &
Social Impact Investing
teven Ellis founded Colorado Capital Management in 2000 with one purpose in mind. Now he has another. The original vision for the company, which provides wealth management services to clients throughout the country, embraces maximizing returns, minimizing expenses, and limiting risk. The expanded version considers not only financial return, but also how investors can make a positive social or environmental impact. An independent, fee-only wealth management firm, Colorado Capital boasts premier credentials, a proven track record and an outstanding reputation. One measure of the firm’s success is its remarkable level of client retention, which has averaged over 97% annually since inception. Ellis told The Suit “This speaks volumes about the authentic and honest advisory relationship we maintain with our clients. We continue, as always, to focus on our core values of Integrity, Quality and Results”. That kind of transparency and unbiased advice has also helped the firm flourish and garner recognition as one of Boulder’s fastest growing companies. “We presently have roughly $250 million in assets under management for 180 families,” Ellis shared. “Using low cost index funds, we don’t try to time or beat the markets – which is usually a losing proposition. And more importantly, we remind investors to remain calm and disciplined in both up and down markets.” To add value to clients and portfolios, the firm focuses on broad diversification, risk management, periodic re-balancing and tax management. Keeping up-to-date on the latest economic news and developments allows Colorado Capital to advise clients on potential risks and opportunities in the markets, and to suggest prudent investment strategies.
Its financial planning process starts with gaining a complete understanding of a client’s unique situation and goals. Only then does the highly qualified team move ahead to create a carefully curated financial map tailored specially to each individual. Through regular communication and reviews, Colorado Capital works closely with clients to help pursue and realize their financial and life goals. Ellis formed the company in 2000, and brings 30 years of industry experience to the table. A Chartered Financial Analyst, his early work includes teaching college courses in accounting and finance and consulting for a major accounting firm, in addition to researching and acquiring investments as the chief due diligence officer of a national financial planning firm. His current passion is growing the firm’s presence in impact investing, an explosive trend. Also known as socially responsible, sustainable, ethical, mission-related, triple bottom line,and environmentally friendly, impact investing is invest-
ing with concepts and ideals strongly felt by the investor. Over the last two years, social impact investing has grown by more than 22% to $3.74 trillion in total assets, according to data from Forbes. Roughly $1 out of every $9 under professional management in the U.S. is currently classified as a socially responsible investment. As Ellis emphasized, “Getting more people to invest with their hearts as well as their heads is a big priority of mine. I want to help move the needle on getting more dollars invested for impact” Colorado Capital Management commissioned this article and paid a fee for it to be included in The Suit’s online and print editions.
www.coloradocap.com ADVISORS MAGAZINE p.25
by diane e. alter
Gains Footprint in Corporate America
Financial and Healthcare Solutions Lower Costs and Boost Performance
Ernst & Young Entrepreneur Of The Year ®
ong before the 2012 American political thriller “Argo” became a household name by winning the Academy Award for Best Picture, ARGO Data Resource Corporation was the “Argo” being talked about. Founded in 1980 by chairman and CEO Max Martin – sans any outside investment or debt – ARGO has since grown into the premier and predominant software solutions partner for 7 of this country’s top 10 financial institutions – JPMorgan Chase, Bank of America, U.S. Bank, PNC, Capital One, BB&T, and SunTrust. The company also serves the nation’s 200 leading banks, credit unions and lenders, as well as healthcare providers and health information exchange organiADVISORS MAGAZINE - MARCH 2014
zations. “We truly had humble beginnings,” Martin told The Suit. “But I knew we would succeed. I found we could leapfrog industry competition by having a lot better value in needed and offered solutions – and by efficiently and effectively delivering those solutions to financial services organizations. Today we also design and implement innovative technology for the healthcare industry.” He added, “In the healthcare space, ARGO delivers solutions to address crucial issues – access to data across healthcare organizations, duplicate record detection, resolution and prevention, quality of care, population management, and Meaningful Use. What’s more, the eighth largest Inte-
grated Healthcare Delivery Network in the U.S. selected ARGO to deliver its Entity Match & Resolution Enterprise Master Patient Index solution to manage patient information and registration for more than 40 hospitals, clinics, and facilities – and more than 5 million patient records.” ARGO’s many pioneering solutions are supported by proven technology, extensive research, implementation expertise and decades-long industry experience. Using this encompassing expertise, ARGO solutions help clients solve key issues, including cost reduction, risk management, improved customer or patient experience, secure and accurate information exchange, fraud detection and prevention, compliance, and operational efficiency.
“In short, we help financial and healthcare entities achieve goals of attaining revenue growth, efficient operations, satisfied customers, motivated employees, reduced risk and maximum opportunity by providing the most cutting-edge technology solutions,” Martin explained. Currently, recognizing the growing threat of fraud, ARGO is stepping up its presence in the fraud space. Risks associated with fraud are growing at a rapid clip, calling for a systemwide response. In the “2011 Business Banking Trust Study,” the Ponemon Institute found that 56 percent of businesses surveyed had experienced fraud in the preceding 12 months. Of those, 61 percent had been victimized more than once. Among those experiencing
fraud, 75 percent suffered online account takeover and/or online fraud. Survey respondents reported that their banks detected and stopped the fraud in just 22 percent of the cases, meaning that, in 78 percent of the cases, the businesses’ banks failed to catch the fraud and money left accounts – for good. Stolen money was recouped only 10 percent of the time, so defrauded businesses suffered losses in 60 percent of the cases. Those kinds of figures propel Martin into action. “2014 is going to be a key year for ARGO,” Martin said. “We just acquired a Toronto, Canada-based company, specializing in fraud protection across multiple payment channels, detecting fraud at the point of presentment, and Bank Secrecy Act/Anti-Money Laundering monitoring and management. Before the acquisition, ARGO was a tier-two company in the fraud software space, which was simply not good enough. Now, ARGO is a tier-one provider of fraud software.” He added, “ARGO’s fraud solutions provide analytical, investigative, and resolution tools to detect fraud on personal and business accounts, as well as comprehensive fraud detection and prevention for commercial checks and electronic payments.” Offices are located in Richardson, Texas; Memphis, Tennessee; and Toronto, Canada; but ARGO’s vast and varied client base is dotted all across the U.S. and Canada. Always staying one step ahead of the competition – and helping clients do the same – ARGO’s analytics-driven software predicts customer behaviors, recommending actions and providing proactive alerts to prevent issues, logjams or bottlenecks. They also enable organizations to improve workforce staffing, patient identity, fees and pricing, credit approval decisions, and cash inventory. At the core of ARGO’s technology platform is its multi-tiered architecture, processing over 54 million transactions daily. This kind of industry standard foundation ensures high volume and seamless user engagement. Staying focused, obtaining results and delivering a better outcome is what ARGO is all about. Characteristics like stellar leadership, integrity, attention to detail and com-
mitment to quality have helped ARGO stand out in the highly competitive software solution sector. The recipient of numerous awards and accolades, ARGO and Max Martin won their own version of the Academy Award – winning the coveted Ernst & Young Entrepreneur Of The Year® 2013 Award for the Southwest Area North. Presented to innovators and builders of better business landscapes, this prestigious honor is awarded to those individuals who seek to manifest their ideas, help move the economy forward and foster goodwill in their communities. To be sure, software and technology have changed everything. They have changed the way we communicate, the way we do business, the way we work and the way our every action is stored and analyzed. And unquestionably, software applications have changed the economic landscape. Businesses without computer software programs are like books without words, and those without the right kind of software are like unreadable books littered with meaningless words. Today, software is crucial to nearly every company’s performance. Some 20 years ago, software was largely confined to big transactional data center systems for select businesses. Now, it supports nearly every function in every industry – meaning that software spending has swelled, jumping from roughly 32 percent of the total corporate IT investment in 1990 to more than 60 percent today, according to market research firm McKinsey & Company data. By employing industry-specific software tailored to unique needs, organizations can lower costs, boost performance and turn software into a competitive advantage. That’s exactly what ARGO has done and continues to do.
1500 N. Greenville Avenue, Suite 500 Richardson, TX 75081 Phone: 972.866.3300 www.argodata.com
ADVISORS MAGAZINE p.27
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Medicare Confusion Despite the fact that Medicare has been available since 1966, the bulk of those eligible for the program remain somewhat unclear regarding its benefits.
2008 survey conducted by the National Association of Insurance Commissioners during the first year that members of the baby boomer generation became Medicare-eligible, indicated that most were confused regarding their post-retirement health insurance options. Sixty-six percent of survey respondents indicated they were not familiar with the various Medicare options. Fast forward six years down the road and the situation has changed little, according to professionals working in the insurance industry. Ben Rischall, president of Rischall Financial Group based in Maple Grove, Minn., testifies to the situation. He experiences it nearly every day as he works with his clients – a large percentage of whom are approaching retirement age and losing their employer-sponsored health care benefits because of leaving the workforce. “They often are fairly confused because they do get a ton of mail at this time in their lives,” Rischall explained. “They are presented with a lot of information and varying plan options. They need help making a plan selection and evaluating the opportunities with so many different companies.” For Rischall, the initial look at Medicare options opens the opportunity to examine ways his clients can maximize social security benefits, determine how to turn their current assets into income for life and discuss purchase of long term care insurance. That final category – long term care – is a significant issue, according to Rischall. He owns it and his 92-year-old mother has benefited enormously from her coverage as well. Unfortunately, his industry experience documents the fact that too few retirees ever purchase it. “Only a small percentage of our popula-
tion has it,” Rischall laments, adding that ownership of such a policy is one of the first questions he asks senior clients. “I’ve seen seniors who go without long term care insurance end up having to spend down much of their assets and then go on Medicaid as a result.” Senior clients don’t want to burden their families and they don’t want all of their assets liquidated for their care. Yet few have a plan in place. “At some point in time, somebody is going to suffer because of it,” Rischall notes. That is why he is pleased to see new products entering this marketplace – products that aren’t as cost-prohibitive compared to their predecessors but which offer greater protection once coverage kicks in. A few long term care underwriters now offer inflation compounding tied to the Consumer Price Index which increases benefits to match the CPI’s inflation rate. Rischall believes his business will continue focusing on the needs of seniors, especially since more and more boomers are retiring every day. Also, it’s the sector of the industry where he really got a good start. When his family’s sporting goods business surrendered to surrounding big box retailers, Rischall was mentored by a friend. Soon he began making presentations to senior groups on behalf of Medica, a Midwestern-based firm specializing in Medicare, and it didn’t take much time for him to build a full book of business, along with a new career. “I’ve always enjoyed working with clients on individual products such as Medicare,” Rischall said. “It is always a great lead-in to talk about other products and develop a relationship with the client.” Learn more about Rischall Financial Group online at www.rischallfinancial. com. ADVISORS MAGAZINE p.29
by diane e. alter
WISE Sustainable Wealth
Building Relationships: A Family’s CFO The 2008 financial crisis triggered a turning point in the financial services industry. The broad failure and subsequent bailout of many large Wall Street firms, insurance companies and banks created widespread mistrust by many of their wealthy clients. Families who spent decades clinging to the perceived safety of large institutions with storied track records questioned how these firms could be brought to their knees by poor decisions made by their mortgage or investment banking subsidiaries.
ne of the most notable after-effects of this widespread mistrust of big Wall Street firms has been the structural shift among investors, to move assets to trustworthy independent wealth managers, like WMS Partners in Towson, MD. “Our clients can always trust that we have their best interest at heart,” CEO Timothy W. Chase, told The Suit. “Our people, independence and fiduciary oath gives them peace of mind and allows them to sleep at night. We build relationships – not simply investment associations. Functioning as a family’s Chief Financial Officer, the firm is adept at managing the often complex and intimate issues that typically accompany significant wealth.” Chase and his partners founded Towson, MD-based WMS Partners in 1993. Prior to forming the firm, Chase manADVISORS MAGAZINE - MARCH 2014
aged the financial planning division of a regional accounting firm in Baltimore. A Certified Public Accountant, Certified Financial Planner, Chartered Life Underwriter, and Personal Financial Specialist, Chase has helped to build WMS Partners into one of the top wealth management firms in the country. Starting out with a small staff and handful of clients, WMS Partners today boasts a team of 45 and has over $2.5 Billion in assets under management. The firm works with close to 300 families and builds teams of experts to help support each client relationship “We’re selective in the clients we take on. We cater to wealthy families and individuals as our aim is to grow strategically as our service is too intimate to scale to the masses. Our goal is to provide and foster partnerships with our clients, relationships based upon mutual respect and a shared value system,” Chase explained. WMS Partners starts each client relationship with careful planning focused on creating a shared understanding of
each client’s financial goals. After they determine each client’s needs they work in tandem with accountants, attorneys, outside investment advisers, insurance professionals and philanthropic advisers. WMS Partners acts as a client’s advocate and central point for financial affairs, running the gamut from portfolio management to estate planning and gifting. “Wealth management is not a one-and-done association; it’s an ongoing relationship,” Chase added. With its vast expertise, flexible approach and unique understanding of financial markets, the firm is an ideal partner for families and individuals who desire a discreet and highly experienced team. “Before we make any kind of investment recommendation or plot a portfolio, we get to know our clients. We keep in regular contact and are proactive making changes as necessary. A carefully curated core portfolio is the foundation of our approach to investing. We have a saying here that goes ‘if you’ve won the war why continue to fight the
WMS Partners was founded and continues to operate as a comprehensive family office and financial advisory service whose sole duty is to serve our clients’ b est interests.
battle.’ In short, the majority of our clients have reached the point where they have realized financial freedom. To them and to us it’s most important to hold on to assets by using relatively safe investments instead of chasing riskier returns,” Chase detailed. At WMS Partners investment portfolios are created with a strategic outlook and use the most efficient vehicles (from both a cost and tax perspective) to achieve their clients’ investment goals. WMS Partners believes that investment strategies no longer fit neatly within traditional asset class categories such as stocks and bonds. By maintaining an objective and agnostic approach to selecting the types of strategies and securities utilized to achieve client goals, WMS Partners clients can benefit from owning mutual funds, individual stocks, ETF’s, private investments and alternative strategies. In fact, due to their substantial asset base, clients gain access to alternative strategies that may not be available to most investors. Examples of these types of investments are
direct investments into income generating real estate, deep value distressed debt, and a variety of private cash flow streams. “Many of our best investment ideas have been generated as a result of working with our most affluent family office clients. The research and relationships we’ve built as a result of investing larger portfolios has helped WMS Partners provide our entire client base with more opportunities to diversify their portfolios using alternative assets.” said Chase. Many independent wealth managers viewed the market turmoil in 2008 as an opportunity to expand their regional footprint. While Wall Street firms required bailouts from the Federal Reserve independent firms like WMS Partners were hiring staff, increasing revenues and adding new clients. “By keeping our clients assets safe in the downturn we had a very shallow hole to dig out of when markets started to rebound. Our clients and our firm fared well during the financial meltdown.” Chase shared. “Our client retention rate is proof. We
have lost very few clients over the years. Looking out for clients is what we do – and we work hard at it. That, plus open and honest relationships, have served clients and the firm well.” What Chase and his firm do exceptionally well is to maintain a clear focus, placing themselves in their client’s shoes and addressing complex and delicate issues. Helping clients make smarter decisions about money, providing an objective perspective on sensitive family issues, educating clients about investing to meet their goals and providing access to unique cash-flow based investments are just a few of the perks WMS Partners has to offer. To be sure, today’s tricky and ever-changing financial markets have made wealth management more challenging and more important than ever. That’s why proficient, experienced professionals like Tim Chase and the team at WMS Partners – are the future of wealth management.
ADVISORS MAGAZINE p.31
by diane e. alter
Insightful Financial Planning THAT INCLUDES THE “WHAT IFS”
tudies show that wealth managers – financial advisors who develop counseling relationships with a select number of affluent clients – are likely to have greater success than those who engage in traditional transactional business models. As a result, big Wall Street firms have shelled out big bucks marketing wealth management as part of their services and are training advisors to provide it. Hence, the phrase “wealth management” has become universal throughout the financial industry. However, research from Dow Jones reveals only a small percentage of financial advisors actually use a wealth management model. That’s why more and more individuals who are serious about their financial future, are turning to boutique financial planning firms like NF Wealth Management. One of the firm’s uniquely skilled areas – highly valued as the population is graying – is in developing retirement income plans for retirees and for those about to retire. Based in California’s SiliADVISORS MAGAZINE - MARCH 2014
con Valley, NF Wealth Management provides its diverse client base with tailored investment advice, asset allocation strategies and portfolio recommendation. “Our goal is to help clients preserve and grow their financial assets, and lead them on a path towards financial independence,” President Phil H. Nguyen told the Suit. “While we do help young clients navigate their financial future, most clients are nearing or in retirement. They want to make sure their funds will meet all their financial needs and last their lifetimes.” Portfolios are customized to meet individuals’ needs and goals. But they are all broadly diversified and risk monitored. “We use a variety of metrics to gauge risk and return opportunities. Investment discipline is simply in our nature. And, we don’t hesitate
to make major tactical shifts or take defensive positions when necessary. We believe that managing risk in today’s complex and quickly changing markets, which gyrate between riskon and risk-off, is key to harvesting growth for our clients,” Nguyen explained. Nguyen began his illustrious financial career in 1989 with Bank of America, and soon found his calling was helping clients prepare for the future. With a multitude of financial licenses under his belt, including general securities registration series 6, 7, 63, 65 and life insurance, Nguyen is also a frequent host of retirement planning and investment strategy seminars, as well career transition workshops in the highly competitive Silicon Valley area. Ranked #4 out of the top 50 bank investment representatives in 2002 by Bank Investment Marketing Magazine, Nguyen is a popular guest, appearing regularly on community television shows to share his insights on retirement planning and risk management. The 2008 financial crisis and subsequent Great Recession, followed by the stock market’s 30 percent gain in 2013 and weak start to 2014, underscores the importance of risk management. To be sure, risk management is the single most important factor in financial planning. Identified risks include volatility, inflation, currency and liquidity. But as investors found out, and NF Wealth Management has experienced, managing risks goes beyond allocation and diversification. There are a lot of “what ifs.” History is a great guide. Indeed, those who forget history are doomed to repeat it. www.nfwealth.com
Serving the Public
From a Uniform Fiduciary Standard to Caring for Clients
pinions by experts in the financial advising field varied widely as they participated in a recent Fiduciary News online forum regarding the possible establishment of a uniform fiduciary standard. Some indicated it would not be a top 2014 priority for the Securities and Exchange Commission (SEC). Others said that we can expect the SEC and the U.S. Department of Labor to hammer out any potential legal obstacles in order to begin hearings in the fall. Still others believe that it will fall victim to the usual political wrangling. Away from the bureaucrats, Kenny Cutler, president of FOCUS Financial Group, Inc., based in Tyler, Texas, said that he welcomes a national uniform fiduciary standard governing all aspects of financial investments. “I hope so,” Cutler said regarding such a standard’s potential establishment. “I think the public will be better served with a uniform standard.” Such a standard would ideally hold broker-dealers to a standard that is just as rigorous as the current standard for fee-based investment advisers, while preserving the unique services offered by each group. FOCUS Financial moved to a fee-based model that Cutler believes his clients value more than previous methods of transacting financial investments. “The disclosure up front seems to help them better understand why the fee-based model is a more feasible and economic model for them,” Cutler explained. Cutler got his start in the financial services industry through teaching. As a college professor, he was exploring retirement methodologies with his students when his own interest in finance was sparked, and in 1987 he became a
CERTIFIED FINANCIAL PLANNING™ practitioner. While he admits getting started was a bit difficult, Cutler's biggest challenge exists in keeping today’s clients and their financial goals on track. Longer life spans, sequential retirements and helping clients adjust their expectations to the market’s reality represent the most pressing tasks. “It is the most challenging to implement,” Cutler said. “None of us know how long we are going to live and so that is the toughest challenge as a financial planner. I have to look at the client’s particular situation in terms of longevity and I really don’t know when it will end.” One fact that doesn't change is his willingness to stick with a client. Several clients represent three generations of family members trusting their finances to Cutler. He not only considers that a great success but also cherishes the relationships he has built. “Doing those kinds of things are very rewarding for me,” Cutler said. “I want to be somebody that my clients feel they can call on and rely on when the subject of money comes up – even when it isn’t directly related to my services.” www.focusfinancialgroup.net
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker Dealer, Member FINRA/SIPC Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor Cambridge and FOCUS Financial Group, Inc., are not affiliated
by diane e. alter
the greatest financial resource
Workable Wealth and Investments Strategies Numerous studies show that most high net worth individuals don’t manage their own investments on a day-to-day basis. They leave that daunting, yet vital task to select financial advisers. To be sure, choosing a reputable, hands-on and concerned financial adviser is crucial.
We manage wealth for high net worth clients with a concerned focus on maintenance rather than rapid growth,” J. Steven Hutchinson, CEO and CIO of Hutchinson Private Wealth, told The Suit. “Most of our clients are conservative investors who want to hold on to their wealth. They prefer slow and steady gains to risky investment opportunities.” Hutchinson and his stalwart team work closely with high net worth individuals and families to develop personalized wealth and investment management strategies. The Greensboro, NC-based firm then identifies appropriate investment opportunities that will help them reach their financial objectives. Expertise, education and experience are indeed essential features of a qualified financial manager. But what high net worth individuals value most of all in an adviser is trust. While this affluent group shares many traits in common, their investment decisions and choices will always reflect their personal preferences, biases and circumstances. “Our aim is to become our clients’ most trusted adviser and greatest financial resource,” Hutchinson added. “We know that kind of trust must be earned, and our goal is to earn it daily by providing stellar and attentive customer service. Everyone here at Hutchinson Private Wealth genuinely cares about our clients. We keep our promises and we are always discreet. Building strong, meaningful and productive relationships is a top priority.” After nine years in the United States Marine Corps, Hutchinson began building his financial career in 1982. Driven and determined, he organized his first independent financial services firm in 1986, at a time when such a move was deemed daring and bold. Since then, with a bevy of securities licenses under his belt, Hutchinson has flourished by offering his elite client base truly independent private wealth management and family wealth planning services. ADVISORS MAGAZINE - MARCH 2014
Often called upon to share his expertise, Hutchinson has written a number of articles for several financial publications, hosted radio programs, made guest appearances on national television programs and is a frequent keynote speaker, discussing issues related to wealth management and family office services. He is keenly adept at addressing the top nine things high net worth individuals look for from advisers. According to a recent Cerulli Associates/Phoenix Market International Survey, these are: maintaining lifestyle in retirement; funding college education; protecting the current level of wealth; aggressively growing wealth; leaving an estate for heirs; charitable giving; minimizing income and capital gains taxes; enhancing household cash flow; and improving the management of market risk. The management services Hutchinson provides include comprehensive and carefully curated investment strategies, divorce wealth strategies, a second opinion strategy and family office, enabling exclusive access to a platform dedicated to the holistic management of a family’s resources. “Unlike a traditional wealth management office, our families receive a high level of personal service and the uniquely sophisticated view of wealth construction that is required by affluent families,” Hutchinson noted. Hutchinson Private Wealth complements these offerings, when appropriate, by introducing clients to the broader network of resources the firm has at its disposal. “We get to know and understand clients before we create an investment blueprint. Just as every client is unique, so is every investment plan. We purposely limit the number of clients we have so that we can offer cutting-edge management with a firm focus on wealth pres-
ervation, income generation and potential portfolio repair techniques should they be needed,” Hutchinson detailed. Without question, life and financial markets are full of surprises. Always staying attuned to clients’ life cycle changes – and remaining ready to adapt quickly when the economy changes – are at the forefront of successful wealth management. A diligent and comprehensive approach to analyzing complexities and opportunities is what results in solid investment returns. “We regularly review clients’ plans and regularly call ‘family meetings,’ which might include children, attorneys and CPAs. Making sure goals are realistic, and spending is in check, is a delicate dance we have to play. But it’s a twostep we cannot tap over. Our technology platform is one of the most advanced and allows customers the ability to monitor all aspects of their financial plan. We believe accountability is key,” Hutchinson added. With the rapid changes in today’s financial market, one of the best tools for helping to manage and maintain wealth is a passionate and committed financial adviser. With more than three decades of experience filling his impressive resume, one would think Hutchinson might be considering slowing down. Not a chance. “My only regret is that I don’t have more time to do what I want to do – what I love to do. This isn’t really work for me. Hutchin-
son Private Wealth is a place I love. In fact, everyone who works here shares that sentiment,” a passionate Hutchinson emphasized. “We all know why we are here – what we are supposed to do and why.” “The biggest charge I get is the satisfaction of seeing our clients realize their financial and family planning goals,” Steven shares. “I believe that if we continue to keep working hard and do the right things for our clients, we will have a positive impact in helping them reach their financial goals.” He adds, “We are a high touch practice, and we want our clients to know we are very interested in them, not just in their finances.” Steve Hutchinson is a Financial Advisor offering securities through First Allied Securities, Inc. a registered broker dealer, member FINRA/SIPC and offers advisory services through First Allied Advisory Services, Inc., a registered investment adviser.
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BUILDING WEALTH WITH NO SURPRISES
Finding the Opportunity in Obstacles Many people find investing in today’s constantly changing and challenging economic environment to be more complicated and frustrating than ever. Gone are the days when a person needed to do nothing but buy and hold.
ADVISORS MAGAZINE - MARCH 2014
o be sure, the 2008 Great Recession and handful of high-profile scandals that seriously blemished Wall Street, prompted every investor to assess their financial situations. Never has the need and desire for the assistance of a seasoned wealth management specialist been higher. Indeed, David Malleck, a Certified Investment Management Analyst and principal with Raymond James Financial Services, has seen the demand for his services rise for well over the last five years. “From 2008 through 2013, assets we have under management at Malleck Wealth Management LLP soared from $35 million to $300 million,” Malleck told The Suit. “We grew by ten times in five years’ time.” Malleck began his career in 1982 with Shearson Brothers, and has indeed navigated through both the most bullish and bearish of financial times. That kind of experience and credibility is invaluable and rare. Not many financial planning experts have endured for so long. “I truly know how to find the opportunity in obstacles,” Malleck shared.
“While I don’t try to time markets or beat benchmarks, I do stay actively involved. Helping clients reach goals and reducing risk along the way is at the forefront of what I do.” The bulk of Malleck’s clients are women in transition and in business. “Our team has found we work best with clients who allow us to delegate. We don’t aim for full discretion by any means. But those who allow us to do what we do best tend to work out the best for us,” Mallek explained. With an expertise in building portfolios, Malleck always starts by getting to know the client and building an authentic relationship. “We discuss all those touchy topics that run the gamut from retirement to long-term healthcare. We run the best and worst case scenarios, and address the inevitable hiccups upfront so there are no surprises. Keeping in close contact is also key. You can’t be complacent in this business” Malleck continued. Working through the maze of investment and retirement options, Malleck and his team strive mightily to create long-lasting, sustainable wealth. At the core is a thoughtful and organized approach to investing aimed at helping clients achieve short and long term objectives, whatever they may be. Malleck says the three things that motivate him every day are the same three things he repeats daily to his children: “to be kind, be responsible and be inspired.” Who wouldn’t want a kind, responsible and inspired professional like Malleck, looking after their financial well-being and future?
Insuring Shoreline Properties
Rising Prices Create a Challenge
ecuring waterfront property insurance in today’s market – post 2012’s Super Storm Sandy and 2011’s Hurricane Irene – is a bit like getting dropped in the middle of storm and being told there is no lifeboat, but only a life ring out there for you to go find somewhere amidst the crashing waves. And you’ll grab whatever you can secure to stay afloat, because it isn’t the time to be too picky. “There just isn’t much wiggle room from a price standpoint at this stage of the game,” explains Ronald Burns, president of Burns & Kelly Insurance LLC, located in Milford, Conn. “Right now we are strictly trying to find insurance carriers willing to offer the coverage.” With a company located near the Atlantic shore and a plethora of summer resort towns, securing waterfront insurance has been his specialty for many years. Despite years of experience, however, Burns admits he is frustrated. “There certainly is only a very limited source of coverage available now for waterfront properties,” he said. “Prices that were absolutely unreasonable five years ago look pretty attractive today.” Burns knows that rising premiums are a natural market reaction to an equally natural chain of weather-related events. That part of the premium-raising equation can’t be changed. Insurance companies have their own weather modeling experts studying historical weather patterns, attempting to forecast what’s to come. Even by 2009, premiums were already being raised to reflect these predictions. What could change, according to Burns, are state require-
ments that large portions of the collected premium be invested in U.S. Treasury bonds. “The insurance companies are being forced to buy into an investment instrument that previously had a reasonable rate of return but now has a tremendously low rate of return,” Burns said. “At one point, buying into the U.S. Treasury had been considered the safest investment in the world, but I am not so sure someone could say that now with a $17 trillion debt.” Burns thinks that the investment requirement burdens insurance companies, creating an obstacle to finding lower premiums. He sees a significant economic tie between the storm surges flooding Atlantic coastlines and the nation’s financial woes, pointing to the billions of dollars in claims that had to be paid from a fund with no reserve or plan in place to mitigate such a huge financial drain. Yet Burns has no desire to leave the property insurance business. Long before Obamacare was created, he opted to not focus on health insurance. “I could see the writing on the wall that health insurance and life insurance were not the markets for me to be in. I knew those markets were very unstable even 15 to 18 years ago,” Burns said. 1362 New Haven Ave. Milford, CT 06460 Phone: 203-301-0409 www.bkia.com
by diane e. alter
Strictly for Federal Employees
Retirement Planning Strategies for Government Workers
2013 retirement survey from investment powerhouse BlackRock revealed that the lack of widespread concern about retirement planning is linked to a serious lack of understanding of retirement needs. “Confusion and lack of clarity around retirement needs has led many participants to inaction,” according to the findings. “Forty-five percent say they are not saving [for retirement] because they don’t know how much they will need.” That inaction is exactly why people need to seek the advice and guidance of professionals like Ann Vanderslice, president and CEO of Retirement Planning Strategies. Working in a niche financial services arena – one strictly devoted to federal workers – Vanderslice customizes retirement strategies that are tailored to her federal employee-only client-base’s specific needs and goals. “We help federal employees break down the complexities of federal benefits into easily understood language,” Vanderslice told The Suit. “Our unique value comes not from just helping clients understand their complex set of benefits, but also from knowing how to maximize those benefits for clients.” Based in Lakewood, Colorado, the ADVISORS MAGAZINE - MARCH 2014
spirited Vanderslice founded the firm in 2000. She is now nationally recognized as a premier authority in retirement planning for federal workers, and has been featured in both the Wall Street Journal and Reuters. “Right now, some 40 percent of all federal government workers are eligible for retirement,” Vanderslice explained. “We help clients decide if they should accept a buy-out package if offered one. Every client and every situation is different, so we get to know clients before plotting any course. And, our planning process is an ongoing thing. We track clients’ progress to ensure their retirement dollars are working optimally.” Vanderslice also conducts lunch-time workshops and retirement planning classes in various cities across Colorado and throughout the country. Topics covered include how to maximize federal benefits, the best day to retire, maximizing sick and annual leave, survivors benefits, insurance benefits and all there is to know about the Thrift Savings Plan. A secure, sound retirement is every worker’s ultimate goal. And because we are living longer, healthier lives, we can expect to spend more time in retirement than our predecessors. Achieving this universal dream of a sound, comfortable retirement is much easier when you can plan your finances. Presently, the median household headed by a person aged 60-62 with a 401(k) account has less than one-quarter of what is needed in that account to maintain its standard of living in retirement, according to the Center for Retirement Research at Boston College. Faced with shortfalls, people are postponing retirement, cutting back on expenditures, taking on riskier bets with investments and making the kind of sacrifices they never envisioned. Experts like Vanderslice picture a meaningful retirement for all workers – as long as they can start saving more, start saving earlier and start saving smarter. Federal workers can start the planning process by calling Vanderslice. Securities offered by Cabot Lodge Securities LLC, New York, New York, Member SIPC / FINRA
It’s a Perfect Fit
Finding Capital for Middle Market Companies
electing the best qualified partner to help raise capital is a key step in any successful financing strategy. Describing this as one of the main ingredients necessary to the success of a middle market firm’s capital campaign, the Middle Market Executive newsletter also issues a reminder that the person selected is someone you will have to work with for a long period of time. That advice is echoed by Eileen M. Burke, founder and managing partner of West End Capital and Advisory in New York. “We advise management teams to take time really getting to know their potential advisors,” Burke explained. “Do they have enough experience to withstand the difficult situations that can come up in a complex deal? You’re going to be in the trenches together, and you need an advisor who is strong, committed to moving ahead, and that you like spending time with.” ADVISORS MAGAZINE - MARCH 2014
West End provides a range of advisory services to companies of all sizes, from corporate development to mergers and acquisition advice. But West End’s specialty is helping companies develop sensible capital formation plans, and then taking them through the process from start to finish. “Because my partners and I spent our careers making investments at big banks and asset management firms, we understand the investment process from the inside out. We use our own experience as a litmus test when we consider taking on new potential clients.” Burke’s firm evaluates potential clients using several key criteria. The first step involves a preliminary review of the company’s business plan and operating track record. West End tends to avoid start-ups, preferring to work with a company that has some history. “We look for (a company) that has been in business for at least a few years and has a solid business plan,” Burke said. “It can be a small company, but it needs to be up, running, and generating cash flow.” Burke’s team then analyzes the company’s position within the marketplace and whether it has a sustainable competitive advantage. They also look for special features of interest to investors. “It’s never the same answer each time, but we look for something distinct about the company that an investor would be attracted to,” Burke explains. “Maybe they’re in a very appealing market segment and are poised to take off. On the other hand, a company may not have big expansion opportunities, but their business throws off a lot of cash. Or, maybe the CEO is a fantastic leader who has a track record of picking great people and building market leaders.” Whatever that special feature may be, Burke and her colleagues know first-hand just what investors seek. “The big factor that differentiates our firm is my team’s combined 70 years of investing experience. Not only do we understand the big picture, but we’ve managed the nuts and bolts of getting billions of dollars of deals done behind closed doors at banks and hedge funds,” Burke said. “It’s almost like we’re a secret weapon for our clients. A lot of people working in this business don’t have that background. They have been more on the advisory side for their entire careers.” Burke’s experience allows her to prepare an extensive investment memorandum for potential investors. Although time-consuming, it pays off in the end. “By the time the investors finish reading the memo, it gives them a lot of
analysis – enough to make an assessment whether this is an investment they would like to pursue,” she said. “This benefits clients, since delays in gathering pertinent information happen before investors are approached,” Burke said. Speeding up the deal review process for investors reduces the possibility of deals falling apart because of excessive time lapses. One of the biggest challenges in her business is that in reality, most jobs take much longer than anticipated. “Eighty-five to 90 percent of the time it takes longer to complete transactions and go through all the steps than you expect,” Burke said. She believes this is because middle market companies are often thinly staffed and have limited experience raising institutional capital. “All of a sudden there is this whole new project that is not your basic business,” Burke said in describing the typical reaction a middle market firm experiences once her team is on board and in house. “Sometimes clients are overwhelmed by all the steps in the process. Or they don’t listen because they’ve picked up some general information along the way and think they know what is needed. That’s why we only work with management teams who are truly willing to listen and learn.” Burke explained. “Otherwise it defeats the purpose and creates unnecessary stress. When you understand what you know and what you don’t know, it saves time and you get a better result.” Despite the challenges, working with middle market companies is exactly where Burke chooses to be. At Fleet Bank, she founded and ran a successful entertainment lending practice. When Fleet was being bought by Bank of America, Burke used her banking and entertainment connections to form the first junior capital investing business focused on the entertainment industry. “Entertainment companies benefited from a robust senior
Eileen Burke, Thurman E. Scott, Artistic Director Actors Theatre Workshop, Shlomo Bakhash, President of the Kash Group and Lilian Bakhash at the ART NY Local Hero Awards.
bank loan market and a range of equity investors,” Burke notes, “but no one was focusing on junior debt: I wanted to build a new business and at the same time, support the people I’d worked with for so many years.” She did just that, and five years later, she was in a position to start West End. Burke has been successfully working the middle ever since. 369 Lexington Avenue, Suite 311 New York, NY 10017 917-975-8723 firstname.lastname@example.org www.westendca.com
ADVISORS MAGAZINE p.41
by amy m. armstrong
Let the Riding Begin
Leasing Gets New Riders Started The demographics of motorcycle riders – particularly those mounting a Harley Davidson – is changing. Once known primarily as a bike ridden by older white males, it is now becoming the bike of choice for women, for younger riders irrespective of gender and racial background.
The H-D leasing specialists. Since 2011
hese potential new riders are some of the leading reasons why Peter Wasmer, President & CEO of Chrome Capital Group, and his team of professionals established their innovative leasing program to get more riders onto more Harleys without the burden of a long-term loan and a large down payment. “The TestRide lease affords riders the opportunity to step into the Harley-Davidson lifestyle on terms that match their riding habits. ” Wasmer explained. Many riders seek the thrill of riding but aren’t ready to be married to the financial commitment of a six- to seven-year loan that an outright purchase may require. “A three-year lease is a much better fit for the Harley-Davidson experience,” notes Wasmer. Most riders want to tradein or trade-up their bikes after two to three years of riding. It’s especially true of new riders who often opt for a less powerful bike during the first years of riding, as they learn the ins and outs of handling a motorcycle. Riding out on the open road with the wind whipping through your hair represents absolute freedom.” Wasmer said that a lease versus a purchase also represents a similar sense of freedom: the TestRide lease has no mileage limits, and the lessee is free to take advantage of numerous options at the end of the lease. Harley-Davidson is iconic Americana that people can readily identify with – as does Wasmer, who is also a rider. Establishing a Harley-Davidson leasing program via his own company struck a particularly American chord with him. “I grew up in a family where having your own business was part of life,” Wasmer said. “I tell people that I am the American dream made manifest. My father came directly from Cuba in 1951, educated himself, and successfully pursued the American dream to its fullest extent. He has given our family an excellent life,
ADVISORS MAGAZINE - MARCH 2014
focusing on providing top education and brilliant life experiences, thereby demonstrating the benefits of hard work, determination, and ingenuity. By extension, I am capitalizing on that gift. Working with our world-class team to build Chrome Capital is the ultimate dream for me.” For 2014, the ultimate Harley dream represents something of a watershed, with the Motor Company commencing the transition from the traditional aircooled engines to liquid-cooled engines that perform better in urban driving conditions where gridlock and soaring outdoor temperatures can tax an engine. What hasn’t changed at all is the distinctive rumble produced by a Harley-Davidson. That sound and timeless styling act like a magnet, enticing the adventuresome to put on their leathers and head out on the highway. This drives Wasmer and his team to continue expanding partnerships with more dealers in a 36-state operating area. Chrome Capital will add California and New York to its operating area in 2014. After all, he figures, shouldn’t everyone who wants to, get the opportunity to ride an American classic? www.chromecapital.com www.harley-davidson.com
Thinking, Acting and Investing Like a Gentleman
Integrity: First in Any Financial Advice
gentleman knows that it’s often those simple gestures that mean the most. Indeed, good manners will open many a door that has been slammed in the faces of others. “First and foremost, I treat every client as a gentleman would,” Justin M. Follmer, a wealth advisor at Charleston, SC-based Lowcountry Investment Advisors, Inc., told The Suit. “That’s why I put the title “gentleman” on my business card. Wall Street was designed to make money, but no one in this industry – or any other for that matter – should ever take advantage of a person’s finances. To me, it’s all about the client. I am quick to respond to concerns, phone calls and emails. And, I’m always respectful.” Follmer has a steadfast and dedicated group of clients, ranging from ultra-high net worth individuals to working class couples. “I will work with any client that I believe I can help and that I mesh with personally. I enjoy working with people who bring complicated financial situations, with many moving parts, to the table. It keeps me sharp and on my toes.” A U.S. Marine Veteran who completed his tour of duty in Iraq during Operation Iraqi Freedom II, Follmer knows more than most about staying sharp. His courageous military background, coupled with experience in using the most powerful financial management tools, gives him an edge when it comes to focusing on planning around clients’ needs, whether those be dreams, fears, “what-if” scenarios, lifetime milestones or major achievements. “Every client is unique and has different goals. I never take a universal approach when plotting an investment strategy. But I do help all clients manage risk and set realistic goals. My goal is to see clients comfortably into retirement and to grow in doing so,” Follmer shared. To be sure, a gentleman like Follmer puts more into this world than he takes out of it.
FUNDING STRATEGIES FOR STARTUPS Helping Small Business Get Started and Succeed
o matter how groundbreaking your idea for a new business, you won’t get out of the gate without funding. While a number of options exist in finding “seed” money, most of them aren’t available for start-ups. Typically, banks only consider companies that have been in business for two years. Moreover, they insist on seeing a tangible asset that can be used as collateral. Entrepreneurs spend an average of $70,000 to start a business, according to William Bygrave, professor of free enterprise at Babson College in Wellesley, MA. Most of that money comes out of their own pockets. “It isn’t easy starting a business, especially in the wake of the 2008 financial crisis,” Harry E. LeBoeuf, CEO of Bull Financial, LLC, told The Suit. “Banks won’t even look at new businesses due to today’s tight lending environment. Tougher government regulations have also made small business loans harder to get.” Recognizing the need and seizing a great opportunity, LeBoeuf formed Bull Financial in 2006 to offer small business owners additional benefits that conventional mortgage brokers and bankers can’t, won’t or don’t. A retired U.S. Air Force Colonel with expertise in finance, LeBoeuf seeks funding from nontraditional sources like venture capitalists and angel investors. LeBoeuf recently beefed up his firm by expanding services. He also acts as a small business financial consultant, assisting clients in management, leadership and operations. “I help clients find solutions to select needs. Superior customer support and full engagement every step of the way, sets Bull Financial apart. Clients know I’ve got their back,” LeBoeuf emphasized. Small businesses are indeed the backbone of the American economy. Today, over half of America’s workers either own or work for a small business. What’s more, small businesses have generated 64 percent of new jobs over the past 15 years. According to the U.S. Department of Housing and Urban development, small businesses create two out of every three new jobs in the U.S. It’s those kind of numbers that are bullish for the economic recovery, and good for LeBoeuf’s firm, Bull Financial. www.bullfinancial.net
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by judy magness
INVESTING IN GREAT COMMUNICATIONS I nterpersonal communication – the process of sending and receiving messages between two or more people – is the foundation of all personal and professional relationships. A communication breakdown can affect the momentum and outcome of a dialog, a situation or a project, and can leave people feeling unheard, disappointed and powerless. According to reports on the financial industry, one of the top reasons investors leave their existing financial planner in search of another is due to what the client feels is a lack of communication on the part of the adviser. Ned Tufekcic, founder and CEO of ProInvest Financial, Inc. told The Suit, “It is often perceived that financial professionals are in a frontloaded relationship with the client, where all dialog is at the beginning of the process. However, the key is a level communication approach throughout the relationship.” He continues on to say that many initial plans mature and become less viable, so financial planners need to update routinely, ask questions often and not make assumptions. Tufekcic credits proactive communication, along with planning and risk management, as reasons that the economic downturn of 2009 had minimal impact on his clients. ProInvest Financial is based in Pepper Pike, Ohio, an affluent suburb of Cleveland, specializing in comprehensive financial planning and investment solutions for business owners and pre-retirees. Their services include investment management, asset allocation analysis, business continuity planning, estate planning and retirement planning. While some financial advisers may boast about returns, Tufekcic takes pride as he watches his clients grow, both professionally and personally. He calls it a “rewarding two-way
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process” as those who have relied on his advice make some extraordinary leaps in their own lives. Digital marketing helps ProInvest Financial both educate and communicate with their clients. The firm maintains a robust social media presence and believes that doing so reinforces relationships. “Meetings don’t have to be in person,” said Tufekcic. “We now have an extended platform by which we can communicate with clients using Skype, GoToMeeting and other digital venues.” Though most ProInvest Financial clients are members of the baby boomer and Generation X cohorts, Tufekcic’s commitment to Generation Y is impressive. “We owe the millennial generation in this country the opportunity to receive competent financial advice, shepherding, and nurturing. We owe them delivery of the outcome that they perhaps don’t see yet in their own dreams, but what they will ultimately seek,” he said. Currently, Tufekcic is searching carefully for a millennial-aged adviser to bring into his firm, intending to mentor this person toward full partnership. “I want to develop a succession plan that is the envy of all my peers,” he said. “If we are to sustain what we have done so well, we need to look toward the millennial generation.” Ned Tufekcic is a registered representative and investment advisor representative of Cambridge Investment Research Advisors, Inc. a Registered Investment Advisor. Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC; Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and ProInvest Financial Inc., are not affiliated
The Perception of Risk
Building Relationships With Clients
nowing the exact measure of a client’s risk tolerance is an effective, yet at times elusive, tool for financial planners. Researchers at Texas Tech University recently presented findings at a conference sponsored by the national Financial Planning Association, indicating that a client’s risk tolerance itself doesn’t change much with market fluctuations. The researchers determined that real change is in the client’s own perception of the risk. They presented the idea that clients load up on stocks in a bull market, not because they are more tolerant of risk, but because they don’t even perceive one to exist. This reading of a client’s perception is in line with how C. Michael Johnson, president of Wealth Planning Corporation based in Cincinnati, Ohio, handles the interactions conducted by his firm. “In our firm, our unique ability is that, because we are planning advisers, we start with building that rela-
tionship around the answer to the question: ‘What does the client need?’ Generally that is two things,” Johnson explains. “What do they see as their dangers, opportunities and strengths, and how do we guide them toward the opportunities they may be missing now to get them to what they see as their bigger future.” This guidance is done via a trademarked process Johnson calls “The Money Coaching System.” It is a
“Trust is the common thread in any successful relationship. Jeopardize the trust, and the relationship will become stressful, eventually dissolving. Trust, however, must be earned over time. coaching system chock full of financial benchmarks, detailing for a client what their working capital must be in 10, 20 and 30 years, based
ADVISORS MAGAZINE - MARCH 2014
on their goals. Johnson said, “It’s true that everyone wants to make more money. Yet the question so many don’t ask themselves is, ‘How much more compared to what?’” He said, “Most people don’t have a clue what that really is,” he said. “We use this process to help us define for them what their standards and objectives are.” Doing this often means making adjustments, yet Johnson can speak from experience that the temporary pains associated with making changes are indeed temporary. When he transitioned from commission-based work to a fee-based model, he himself experienced a fair amount of stress. Johnson admits that going from a large, up-front commission to a quarterly, fee-based payment resulted in a “hit on cash flow” and he indicated that he “had some scary times.” Yet Johnson hung in, he said – and persevered. That was his motto during 2008 and 2009 when clients’ portfolio values were declining due to a radical market correction as the housing bubble burst. Johnson told his clients that he was hanging in with them – and he meant what he said. “The biggest thing for getting through that success-
fully was having constant contact with the clients, reassuring them about what was going on and communicating our strategy and moves so they were comfortable with the actions the firm was taking on their behalf,” Johnson said. It worked: The firm had an astounding (or use incredible) 92 percent client retention during a time when client migration between firms more closely resembled the habits of birds reacting to weather patterns. “We acknowledged that yes, this is painful,” Johnson said. “But we also said that we are staying in dialogue with you to get you through this, and your money will begin to grow again and you will get back on course.”
by diane e. alters
Seriously Sensible About Wealth Management
Total Care for All Your Investment Needs
ealth managers do much more than pick stocks, bonds and funds. While their services might start there, they go much further. Good wealth managers are actively involved in their clients’ current situations as well as in their future goals and objectives. Re-balancing an investment profile and portfolio based on where a client is in life and what life changes have occurred, for example, are among wealth managers’ top priorities. In short, wealth managers deal with many of the difficult financial decisions that the majority of people would rather avoid. SRS Wealth Management Group Inc. tackles those thorny issues headon. For more than 14 years, the Baton Rouge, LA-based firm has been flourishing by providing comprehensive and independent financial guidance to scores of individuals, beginning with
come on board. “What’s important to us is that a person is serious about their financial planning, has realistic goals and is dedicated to our direction of helping them move forward, with confidence in their financial future. We take time to sit with each client to get a clear picture of the big picture. We have to be a good fit to get good results. All prospective clients come to us by referral. That speaks volumes about our current clients’ satisfaction with us,” Boggs explained. Wealth managers have never been more needed than now. Soaring stock values have motivated investors to shift sideline money into equities and other investment vehicles. While 2014 is expected to be another positive year for stocks, money managers say investors shouldn’t expect the outsized gains of 2013. Additionally, changes to capital gains, dividends and estate taxes can easily strip away investors’ profits. Then there’s the healthcare direction. “People are living longer, and in better health. It’s not only important that people have enough funds to last their longer lifetimes. They also need to have a long-term care plan in place,” Boggs shared. Boggs also takes great care in selecting the people he brings in to carry out his carefully curated investment decisions for the company's diverse client base. Inspired by family, religion, his work crew and love of country, Boggs is passionately driven to succeed in everything that he does. That unwavering ambition serves his clients very well indeed.
former BellSouth employees. Its strong commitment to “serving the customer” remains central to the company's culture. For that reason also, it partners with one of the largest broker-dealers in the U.S., in order to be free to offer clients truly objective advice. “We keep it simple,” Christopher Boggs, SRS President, told The Suit. “Offering a 'total care' approach to wealth management, we provide investment selection, address debt and credit issues, and engage in estate and retirement planning. With access to expert estate attorneys, insurance providers, Affordable Care Act healthcare professionals and CPAs, we can ensure that clients’ needs are expertly met and in a timely manner.” Specializing in helping individuals approaching or already in retirement, SRS doesn’t set limits on the amount www.srswealthmanagementgroup.com of assets necessary for someone to ADVISORS MAGAZINE p.47
by amy m. armstrong
TEACHING People to Fish
A Unique Educational System for Self-Directed Investing
ive years past the financial meltdown of 2008, dubbed “The Great Recession,” the small investor still does not trust Wall Street. According to a 2013 report, issued in the fall by the American Enterprise Institute (AEI) of Washington, D.C., that distrust doesn’t simply exist – it grew at a healthy pace and still maintains an active presence. The AEI report cited several recent polls from Harris Interactive, The Atlantic and the Aspen Institute. Using the same survey as it has for the past 23 years, Harris found that in 2007, only 30 percent of respondents indicated little or no confidence in the financial industry. Just two years later in 2009, when the effects of the 2008 meltdown had yet to subside, that number doubled, climbing to a startling 60 percent. Three years later in 2012, those expressing little or no confidence dropped by a ADVISORS MAGAZINE - MARCH 2014
less-than-comforting nine percentage points to 51 percent. Public distrust at first glance might not appear to benefit financial advisers. Yet for Mario Romano, co-founder and CEO of Wealth Engineering, LLC based in Tinton Falls, NJ, it has transformed into monetary self-actualization not only for Romano, but also for clients utilizing the system, uniquely designed to aid self-directed investors. “After spending 30 years on Wall Street, I knew there was a huge void for the ‘small investor,’” said Romano. “Financial institutions do not necessarily have the best interest of the client in mind at all times. People want to start learning how to manage a portion of their own capital.” A desire to help people do just that is what prompted Romano to establish Wealth Engineering in 2005. Completely online, the firm specializes in investor education and strategic trading processes. Back in 2002, he asked Annette Raynor, a financial IT expert, to analyze a software program moni-
toring the cash flow of publicly-traded companies. In doing so, she advised Romano of the enormous potential for an efficient tool the general public could use to manage investments. Romano heeded Raynor’s advice, and they co-founded Wealth Engineering. The software program became the framework for an online financial education platform owned by what is now a publicly traded company: Investview Inc. (INVU) Romano’s firm became a marketer for the company’s services and brokered a deal for the company with Questrade, a Canadian discount brokerage firm and Raynor worked with the firm as an education Coach for their Core Investing room and assisted the company in bringing their 7 Minute Investor portfolio product to market. Partnering with Chad Miller and Ryan Smith, both of whom are pioneers of the online financial education sector and managing members of CR Capital Holdings, LLC of Farmington, UT in March of 2013, Romano launched
‘Remember, wealth is not automatic. It has to be engineered! It is generated!’” - Patrick Kucera, Entrepreneurial Evangelist
a new online financial services platform, called Wealth Generators. A few months later, in November, Investview became a distributor for Wealth Generators. The Wealth Generators platform does much more than analyze stock performance and provide trade alerts. It also helps investors earn income by referring others. “Wealth Generators takes the complexity out of the stock market because it offers strategies designed and managed by their Market Experts,” Romano said. “Each member is provided the knowledge and trade details created by the Market Expert. The best way to learn is through application and that is exactly what Wealth Generators does. It educates each individual on the various strategies but even more important it applies the education through ongoing trade alerts that take a strategy from start to finish.” To Romano’s way of thinking, the focus on individual education is a key component. He believes it empowers the individual investor – whether big or small in terms of dollars – to leave behind the distrust of previous financial experiences and the fatigue brought on from worrying about future impacts. By completing the educational videos and then following and executing the trade strategies, each individual gains the confidence they need to better approach their investment capital. “Wealth Generators is seeking to change the public’s perception that a small individual investor cannot manage his own portfolio,” Romano said. The system’s users vary from 18-year-old’s with starter jobs learning the first basics of money management to the mid-lifer trying to maximize income sources during working years to the retiree mastering the art of managing a nest egg. It also provides those with limited or no working capital an
opportunity to bolster their resources via referral generation through the system’s network marketing model. This gives users two methods to increase cash flow each week: first via regular market trading and second by bringing other individual investors online. Wealth Generators utilizes the services of market experts such as Corey Halliday, a coach and instructor with Investview, to advise platform users regarding financial choices they believe might be the most prudent under current market conditions. What the platform coach experts do not do is to tell a user which specific trade to make or not to make. “This,” Romano said, “differs from the traditional client/adviser relationship in that platform users make the trade decision for themselves but with the added benefit of the Market Expert as a coach.” “Two analogies that I quite often tell people are: if Tiger Woods walked up to you on the green and said your feet are spread too far apart while you are putting, would you not narrow your stance?” Romano explained. “If Peyton Manning was teaching your son how to throw a football and he told your son to step into his throws instead of throwing off his back foot, would you not expect your son to start stepping into his throws?” Wealth Generators and their Market Experts function as a financial coach. Imagine what you would have to pay for the services of a private coach. The Wealth Generators system is affordable enabling everyone access and the ability to take their financial future into their own hands. Perhaps the question closer to home for Romano could be posed in this manner: Are you as a small individual investor, going to listen to advice from a guy who spent more than three decades working on Wall Street and
who believes the system is broken? If the answer is yes, then tune Romano in. He started at Lehman Brothers in 1982 while attending college at St. John’s University. After, graduating in 1987, he worked as an assistant to several brokers, formed his own company, Romano Enterprises LLC, in 2000. That firm – an equity hedge fund dedicated to the needs of individual investors – was in some respects a forerunner to Wealth Generators. Romano believes the biggest take away from his Wall Street experience is the lack of trading expertise by the majority of brokers. In the past brokers were taught to be salespeople not necessarily successful investors. The brokers’ objective is to earn a commission while the investor’s objective is to make money. As long as these objectives remain mismatched we will continue to see distrust of Wall Street increase. Individuals can be educated and they can apply this knowledge with the proper coaching along the way. Wealth Generators offers a platform that accomplishes this along with a commitment to transparency and compliance as evidenced by the fact that each one of the trade strategies includes full historical trade performance including entry, exit, adjustments and final returns. “My goal for 2014 is to create financial independence for all,” Romano said. “If done right, we will teach
people a skill for life.”
www.wealthgenerators.com Contact Us: 888-778-5372
ADVISORS MAGAZINE p.49
by amy a. armstrong
Singing and Relationships Build a Strong Firm
early half of working Americans ages 50 and above indicate they most likely will be forced to continue working for pay during their retirement years. This is according to a survey released in Oct. 2013 produced by the Associated Press-NORC Center for Public Affairs Research. The survey suggests that by 2020, more than 25 percent of the American workforce will be age 55 or older. With U.S. Census Bureau reports dating back to 1995 indicating that older workers today tend to be better educated and healthier, with longer life expectancies than their counterparts in the 1960s, wealth management planners such as Gary A. Richman, president of Richman Wealth Management in Pikesville, Md., are increasingly aware of their specialized needs. Richman’s approach involves providing clients with monthly income calendars detailing their expenses and the income level they need to meet those expenses upon retirement. “As we get older and get further along in our careers or closer to retirement, we get closer to the concept that bills are monthly; if bills are monthly, then life is monthly. And since life is monthly, shouldn’t investment results start to match up against the bills,” Richman said. “So I send my clients calendars and they can see exactly how much money ADVISORS MAGAZINE - MARCH 2014
is going to come in each month based on dividends. It keeps me in communication with them and helps me to respond immediately to their needs to reduce the volatility in their portfolios.” Richman is a believer in the customization of portfolios – but with an old-school twist. He subscribes to the financial investment theory that there truly is only one main portfolio type which is then adjusted to meet the specific goals and risk tolerance of each investor. “A broker truly can only accurately and fully follow at the most 50 different positions or stocks,” Richman said. “The question you ask yourself as a broker is, ‘How much of each of those positions do you put in each client’s account based on what their goals are?’” He explained that this is why no two portfolios he constructs are identical. Yet all are built around a common list of 50 positions Richman believes will produce desired results. Despite their increasing popularity, Richman is not a fan of computer-generated theoretical portfolios. He thinks that the broker himself needs to determine what is appropriate for the client – not a computer. Richman accomplishes this by limiting his firm’s client roster to 100 families. By contacting four clients a day for
a check-in conversation, he makes contact with each client at least once every month, giving him the opportunity to address any special concerns personally. It’s also created a sort of passive income, in that the next generation of families he currently works with, tend to select Richman for their financial advising needs. In some cases, he is working with the fourth generation of family members. This is the brand of social media and modern communication that he prefers. “My approach is to supersede the Internet by meeting with the families of my clients, inviting them to events and doing conferences in the office,” Richman explained. “My question is: ‘Which young clients do you want? Do you want the ones that are Internet savvy only or do you want the ones that are also the future generations of your existing best clients?’ The best way to do that is to meet with them now to help them formulate their approach to the future.” Richman has used other, less than traditional forms of marketing as well. Every Monday night for five years, he used his singing talents for a kind of night club act at the McDonald’s in Pikesville, Maryland. Known as the $inging $tockbroker, Richman belted out the greatest hits of Frank Sinatra, Dean Martin, Perry Como and Bobby Darin to show people his fun side. It worked. “Some people came to every show,” he said. “I got to know them and they have become absolutely terrific clients.” Although Richman's act moved to the Touch of Italy restaurant in Rehoboth Beach, Del., every Thursday evening, it still allows him to continue delivering the personal touch that actually got him into the wealth management industry. Richman has always had a strong entrepreneurial spirit. At age 20, he started a pet shop, which was doing well eight years later. He sold it as part of what he thought might be a first step toward making a living turning real estate. The pet shop purchaser told him he ought to become a stockbroker instead, since he was constantly giving advice to others. “They (the recipients of his advice) were making money and I was making money in the stock market, so I thought
about it,” Richman recalls. In 1981, he started as a stock broker at a time he kindly says had a “horrible market.” After stints in various brokerage houses, Richman went independent with LPL Financial, through which he offers securities. He was weary, too, of the endless cycle of manager promotions, leaving him never knowing whether the next manager would be good or bad. Becoming an independent through LPL Financial allowed Richman to start doing what he enjoys the most: being an entrepreneur and seeking out the best business relationships he could find. “The main thing I look for are long-term relationships with people I enjoy. I can appreciate their goals, and they value and appreciate the advice and guidance I can give them,” he said. “When I begin to work with people’s children, grandchildren and great grandchildren, I consider that the greatest success. It just thrills me.” Learn more about Richman Wealth Management Inc. online at www.lpl.com/gary.richman .
ADVISORS MAGAZINE p.51
by amy m. armstrong
HONESTY AND RESPECTFUL TRANSACTIONS
CHANGING AN IMAGE
he collateral loan business is the Rodney Dangerfield of financial transactions: It doesn’t get the respect it deserves. The business often plays a vital role in providing financial resources for specialty situations more traditional options can't accommodate. Until recent reality shows about pawn shops became popular, even the words “pawn shop” themselves didn’t necessarily bring to mind the most positive of images. Yet for many owners of upscale collateral loan enterprises and the customers they serve, the business is nothing to scoff at. Knowing the industry has had a rough past, its reputation is something owners such as Arthur Abramov of Manhattan Buyers, Inc. in New York City strive to change, by delivering honest and respectful transactions to each client who comes through the door. For many, a collateral loan can be a lifesaver. “It’s a very sensitive topic,” Abramov begins. “Often because of the history, people have had such bad experiences. You don’t get the same kind of trust from clients as you would in a different business.” But he does see that changing. Abramov takes in a large volume of jewelry – both from estate sales and from clients with temporary cash flow challenges wanting to borrow money. One example of the changing state of the industry is a recent deal with the owner of a local construction company. He was waiting for payments from the state and used his wife’s jewelry to secure a short-term collateral loan until he received payment for the completed work. “Once he got paid, he paid off the collateral loan plus interest and kept his business functioning. It was a good way for him to stay low key and not have to go through a lot of channels to get the money he needed.” This case more accurately represents the type of collateral loan that Abramov conducts, rather than the low dollar value loans attributed to the stereotypical “pawn shop” – a term Abramov does not use to describe his business. He willingly pays a bit higher than similar businesses might, but it is a strategy that works. Abramov knows that his “higher-paying” reputation brings more clients through the door and he believes his generosity is made up in volume. Rather than having only two to three clients come in each day, Abramov estimates that client traffic averages at least 20 per day. He also uses a significant online presence to put his company’s message out to the public. He started Manhattan Buyers just as the In-
ternet began transitioning from its infancy as a government entity to a publicly-used tool. Bypassing standard yellow page ads, instead Abramov put up a small but functional website, as he describes it. Since then, his online presence has ballooned, giving clients across the nation access to Manhattan Buyers when searching for fine jewelry, diamonds, watches or rare coins. Currently Abramov recommends that clients invest funds in silver – a precious metal that he believes is often overlooked. Historically, he noted that gold and silver prices are 16 to 1 – meaning that silver should be trading significantly higher than it is now, at approximately $19 per ounce. “You can’t buy much for 19 bucks. If you have 19 bucks to spend, my suggestion is to buy some physical silver coins and hold them,” Abramov said. “Twenty bucks can’t even get you a decent lunch in the city.” It is a slice of real advice that Abramov offers up to those willing to receive the streetwise sense he’s developed throughout the years. He calls each situation just as he sees it. This is what gives him the ability to provide alternative financial assistance and to improve the public’s perception of the collateral loan business – one transaction at a time. www.manhattanbuyers.com
by diane e. alter
RULE NO. 1: DON’T LOSE MONEY
WHEN YOU’VE WON THE GAME, STOP PLAYING
o amount of hope, luck or skill can change the mathematically certain fact that active investing – in all kinds of financial markets – is a zero sum game. After costs, most active investors are doomed to underperform. As daunting and discouraging as that fact is, scores of investors and money managers continue to try to defy the odds, with most failing. But some do succeed. For those fortunate enough to come out ahead, Ryan Peterson has some invaluable advice. “When you’ve won the game, stop playing the game.” President of Raleigh, NC-based Wisdom & Wealth Solutions, Inc, Peterson says his firm’s mantra is “don’t lose money.” When investing in securities portfolios, Peterson certainly cannot guarantee against any loss to a portfolio, but he says it’s important to understand the risk vs. return of the mix you select with your advisor. Having worked through the dot. com boom and bust, the financial crisis of 2008 and a number of scandals that left a great many investors swearing off Wall Street, Peterson says that his approach to risk has changed. “One of our main objectives is to minimize losses – even if it means sitting out some market rallies,” Peterson told The Suit. Wisdom & Wealth Solutions, Inc. has been helping clients with their money for over 25 years. An independent Registered Investment Advisor (RIA), Peterson provides sage investment and retirement planning advice to a broad client base made up mainly of dentists, physicians, active business owners, former business owners and budding entrepreneurs. Most clients are concentrated in the Raleigh, NC and surrounding area, but Wisdom & Wealth Solutions, Inc services clients all over the country. Explaining the firm’s large concentration of business owners, Peterson said that most clients come in via re-
Wisdom & Wealth Solutions, Inc. Independent Registered Investment Advisory Firm Clarity for those with Vision ferral. “Business owners have the advantage of controlling the structure of their business, which also allows them to control their businesses’ cash flow. We partner with established business owners who are seeking to maximize their cash flow efficiencies. Through objective advice and unique solutions, we help clients maximize savings, minimize tax liabilities and manage risk. We plan for both the best and worst case scenarios so clients know they’ll be okay either way,” Peterson clarified. The Affordable Care Act, aka Obamacare, is one scenario that has nearly all of Peterson’s clients worried. “Amid all the delays and amendments, uncertainty reigns. No one knows how this will all turn out. The uncertainty is keeping clients from making capital investments, increasing headcount and expanding. Many in the medical industry say Obamacare is the ‘straw on the camel’s back’ that has them mulling com-
pletely getting out of medicine,” Peterson shared. While watching carefully how it all plays out, Wisdom & Wealth Solutions, Inc. continues successfully assisting clients with all their financial decisions. Peterson’s aim has always been to help people in any way that he can. “Helping people get what they want has helped me get what I want,” he says. And that includes a great sense of satisfaction.
ADVISORS MAGAZINE p.53
by diane e. alter
Born out of the vision of Chief Executive Officer and Chief Investment Officer, Tina Byles Williams, FIS Group’s mission is to provide innovative and effective solutions for enhancing the wealth of our clients, implemented by highly motivated and skilled investment professionals; to exemplify high ethical standards and excellence in all that we endeavor; and to improve our communities.
YOUR SUCCESS… THEIR PASSION
THE ALPHA ADVANTAGE
lpha represents different concepts in physics, chemistry, mathematics, zoology – and even in finance. In the financial world, alpha represents the value a portfolio manager adds to or subtracts from an account’s return above the market, measured by commonly used benchmarks, such as the S&P 500 index. Alpha is the pillar of FIS Group, Inc. “Alpha is an important source of investors’ returns,” FIS Group CEO, CIO and founder Tina Byles Williams, explained to The Suit. “It is a necessary component in helping investors meet their investment objectives. Yet alpha is a scarce and often illusive commodity. Moreover, the more smart people you have chasing it, the more arbitraged away and diminished it becomes.” To be sure, the search for a competent and successful money manager should always focus on alpha. Byles Williams began FIS Group, an asset management and investment advisory firm that aims to produce alpha for its clients, in 1996. CapitalADVISORS MAGAZINE - MARCH 2014
ized with $150,000 that was a second mortgage on her home, Byles Williams effectively grew the Philadelphia firm, adding clients, assets under management and employees. “Today we manage several billions for our diverse institutional client base,” Byles Williams explained. As with most things in life, risk and reward go hand in hand. The greater the potential reward, the greater the risks that need to be undertaken. The best investment managers, like Byles Williams, use their experience and skills to profit from management strategies or assets whose risks are mispriced and whose opportunities are misunderstood. Examples of such strategies include frontier markets as well smaller, experienced and highly talented entrepreneurial investment management firms. FIS Group specializes in offering emerging strategies to public funds, corporations, endowments and foundations, with products tailored to specifically suit each client’s needs and mandates. Strategies are built around
navigating domestic, global, emerging and frontier markets, as well as sectors. The firm also uses the more usual investment vehicles like exchange traded funds (ETFs) and U.S. equities, but Byles Williams sees great potential in global markets. “Currently, half of our assets are invested in non-U.S. equities, including small caps, emerging and frontier markets,” Byles Williams detailed. She is especially keen on frontier markets, which represent some of the world’s less developed capital markets in countries such as Croatia, Tunisia, Vietnam, Kenya and Mozambique. According to Byles Williams, “Frontier markets, represent some of the fastest growing economies, whose companies (as measured by the constituent companies in global stock indices) are reasonably valued but generate higher dividends and profit margins than companies in either developed or emerging countries.” Companies in frontier markets consist chiefly of stocks from those fi-
nancial, telecommunications and consumer companies. Over the last two decades, investments in frontier markets have become increasingly relevant to the global economy, rising six-fold. While these countries do not as a whole offer the highly evolved governance structures and capital markets as developed markets such as the U.S., Byles Williams stated that “investors’ perceptions of the riskiness of these markets typically exceeds reality and does not sufficiently differentiate among what is in fact a considerable variance in governance structures and risks.” Another area of misunderstood risks and opportunity is the perceived riskiness of smaller investment management boutiques vs. the big wirehouse firms. Research by FIS Group and various academics suggest that the skilled investors increase their probability of generating alpha net of their management fees through high conviction portfolios whose holdings vary considerable from common market benchmarks, such as the S&P 500 index. Byles Williams says her firm focuses on smaller entrepreneurial firms that offer such portfolios “because our research and experience suggests that as investment managers
increase the size of their portfolios beyond certain asset thresholds, they are unable to trade as nimbly, their holdings become more benchmark-like and their alpha diminishes.”
“It’s a crucial element for building successful portfolios. My team and I are always tinkering with investment models, seeking better, more lucrative, more efficient ways to invest and make money. We are all a creative and curious bunch that enjoys solving investment challenges. We don’t take our financial positions of helping people lightly.” Byles Williams did take a lighter tone when asked about her greatest successes. Without skipping a beat, she said with a loving motherly un-
dertone, that her greatest success has been in raising two good sons. Professionally, she added, success has meant building her company into a successful and premier investment advisory firm. On a more serious note, Byles Williams says that she and her firm are also proud of their successes in improving their community. Among the charitable community initiatives launched by FIS Group are: the FIS Group Financial Literacy Program designed to help increase the financial literacy of students in low income areas and life and leadership programs focused on girls and women from less privileged backgrounds. As Byles Williams emphasizes, “We’ve all done well. We’re in a position to give back and we do. It’s important to all of us.”
1818 Market Street Suite 3205 Philadelphia, PA. 19103 Phone: (215) 567-1100 Fax: (215) 567-1810 www.fisgroup.com
ADVISORS MAGAZINE p.55
by annabelle preston
Evaluating Today’s Decisions for
Tomorrow’s Impact Despite dire warnings from within his own industry that establishing a national uniform fiduciary standard will be costly, many registered financial advisors such as Jim Beaulieu continue to support the idea. At the behest of the Securities and Exchange Commission spring 2013, Schwab Advisor Services surveyed 843 firms in May 2013 in an effort to determine the cost of harmonizing fiduciary requirements across all aspects of the financial services industry.
Achieve Balance, Live Life on Purpose www.jimbeaulieu.com
ADVISORS MAGAZINE - MARCH 2014
Schwab provided a conservative, yet startling estimate of $174, 560 per registered investment advisor for the first year of compliance to a uniform standard. With 10,500 currently registered investment advisors in the United States, that’s a whopping $1.83 billion. No one is embracing these numbers. Yet, Beaulieu, president of Jim Beaulieu Financial Services LLC, said he thinks the time has come for a uniform standard to be established. “It will be better for the industry and better for clients,” Beaulieu said. “We, whom are registered investment advisors are upheld to the fiduciary standard. I think people who are charging fees for the business they conduct on behalf of others should be held to that same standard and I would help that it does become law.” He concedes he’s unsure a law will be passed. “There are a lot of forces pushing back in the other direction,” he said. In that same Schwab report, estimates provided by the Securities Industry and Financial Markets Association for potential cost for broker-dealers to comply with a uniform fiduciary standard were significantly higher than the RIA side. Estimates were up to $5 million per firm for fiduciary standard compliance. Of the 18 firms surveyed, the average estimated cost was $2 million. These same 18 firms indicated spending an average of $4.6 million in July 2012 to comply with the Financial Industry Regulatory Authority’s suitability Rule 2111, which requires a firm’s employees to determine if a particular financial transaction is suitable for a specific client. Compliance costs in general already segment Beaulieu’s industry. Investors with small accounts are getting
squeezed out. “When I started in the late 1980s, you could help a small investor that had only $50 a month to invest. But now, it really isn’t possible to help that person. Unfortunately, it has just become too expensive in our business to help somebody like that,” Beaulieu laments. “That is part of the negative that has happened from regulation.” Beaulieu began his career directly out of college working for a broker-dealer in a bank setting. He started his own firm in 1997 using the services of an independent broker-dealer. His firm quickly moved toward total financial planning and wealth management and he decided to sever ties with the broker-dealer and become a registered investment advisor. Today he enjoys posing questions such as the following to his clients: “At age 45, are you happy with the outcomes of the decisions you made at age 25? How happy do you think the age 65 you will be with the outcomes of the decisions you at age 45 are getting ready to make? Will they be thanking you for that decision or will they be upset with you?” Beaulieu uses a hybrid investment approach creating portfolios with diversified access into various market asset classes. He likes EFTs for their low cost but shies away from alternative investments stating he’s just seen too many of them go wrong. “Our approach to investing is both passive and active but most definitely based on asset class investing in an effort to put together portfolios that are suitable for a client with a reasonable expectation of returns based on what we are looking for in the numbers needed to fulfill their financial plan.”
by amy m. armstrong
Designing in Diamonds The halo setting, featuring a large stone completely surrounded by tiny, bright and intricately cut diamonds, continues its dominance of the engagement ring market into 2014. It was the “go to” setting in 2013, as celebrities from tennis stars to bachelors on reality television shows opted for this stunning setting when they proposed. This doesn't surprise Israel Bien, owner of Eternal Fine Jewels in Manhattan, but he does offer a word of caution to ladies wearing this style. “The downside to that style, even though I do love it and it is a beautiful way to get creative, is that the wearer does have to be somewhat careful not to pop out a stone or bend the ring,” Bien warned. “Be careful not to strike it against a hard surface – such as a taxi cab door handle.” A big fan of fancy colored diamonds, in dreaming about designing a perfect piece, Bien would begin with a flower shape and fill the petals in with multi-colored diamonds surrounded by fine micro-pave set colored and clear diamonds. “I think it would be an award-winning ring,” he said. Bien knows diamonds, especially since both his father and grandfather were diamond cutters. He himself contends that he does not have the patience to sit at the diamond cutting wheel, but Bien continues the family tradition by offering upscale, uniquely designed jewelry with top quality diamonds as graded by the Gemological Institute of America (GIA). Equally passionate about gemstones and about designing for charities, Bien has done pieces for the Parents of Autistic Children, the National Action Council for Minorities in Engineering, Inc., the Paralyzed Veterans of America, the Winthrop University Hospital Cancer Center for Kids and the National Foundation for Facial Reconstruction. For 2014, Bien's goals include increasing his clients' interest in and ability to secure investment diamonds. Particularly difficult to obtain and therefore most desirable are those sparkling in the various shades of pink, orange, blue and red that are currently aggressively being sought by investors and collectors. “There is always going to be a market for these unique colored diamonds,” Bien said. 10 West 47th Street, New York, NY 10036 P (212) 869.0845 F (212) 944.9423 email@example.com www.eternalfinejewels.com ADVISORS MAGAZINE p.57
to Improve Retirement Readiness
Experts in the retirement planning industry expect the next five years to feature significant improvements in participant engagement as advanced technology provides greater targeting of individual goals. A Nov. 2013 survey conducted by Transamerica Retirement Solutions of the leading 50 retirement specialists in the United States indicates that the more than 88 million Americans currently relying on defined contribution plans for their retirement nest eggs are beginning to demand customized retirement planning. This demand will only continue to increase further.
T John J. Geli - CEO Mr. John Geli is a benefits professional with over 24 years experience in the Financial Services Industry.
echnology, the report points out, can be used as an effective key for unlocking that potential. John Geli, CEO of Wealth Management Systems Inc. (WMSI), based in New York, agrees. His firm specializes in providing unique technology and education solutions to financial firms such as investment advisors, money managers and 401(k) custodians. “Times are changing,” Geli explains. “Companies are looking for new ways to differentiate themselves and deliver more value to customers in every interaction to deepen relationships and increase assets under management. At WMSI, we aggregate unlimited data feeds from internal, external and vendor platforms – including plan, participant and advisor information into one secure, centralized database making data actionable and accessible to all key stakeholders. Combining data with the latest in content management and optimization technologies enables us to anticipate
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and individualize the customer experience for our clients and energize service delivery through all channels – marketing, web, call center, and advisor. These solutions deliver meaningful guidance to customers while creating a more efficient, end-to-end servicing model for investors, record keepers, money managers and advisors.” Since its founding in 2000, WMSI has taken a leading role in developing integrated data management and customer servicing platforms aimed at improving the financial services experience for investors. The firm’s proprietary product – Rollover Central – according to Geli, was the first of its kind. Retirement plan record-keeping systems were integrated with money managers’ IRA opening systems, creating an open marketplace in which participants could compare multiple options and electronically open IRAs with the provider of their choice. “As you can imagine, this was the first time anyone in the industry was supporting a marketplace of rollover options
Technology Technology Technology Financial Education Marketing & Communications Planning Tools
Empowering Your Vision WMSI helps you build greater brand loyalty using advanced technology in combination with education and marketing to deliver personally relevant solutions to your customers.
and moving data electronically to open IRAs in real time,” Geli remarks. “It really revolutionized the way a participant could initiate a rollover while helping to fully educate them about all of their distributions options – including the dangers of cashing-out.” Fast forward to 2014 and WMSI has strategically grown through the acquisition of Archimedes Systems in October of 2012 and the purchase of the S&P Capital IQ Financial Communications Division in October of 2013. Focused on the future, WMSI is committed to helping clients build relationships using advanced technology in combination with integrated financial education, personalized benefit statements and planning tools to deliver relevant solutions to their customers. “WMSI will continue to invest in product offerings that will empower our clients to better anticipate and re-
spond to customer needs," said Geli. "Our industry has put a bright spotlight on the challenges of engaging employees in the planning process to achieve retirement readiness. We are taking a significant step forward in providing not only multi-channel, customer servicing solutions but the integrated marketing and education programs clients need to improve savings behavior and retirement results." Geli is now contemplating how a pending national uniform fiduciary standard will impact the technological services his firm provides. Geli sees the U.S. Department of Labor’s planned August release of compromise rules currently being formulated to bring broker-dealers and fee-based advisors closer to the same standard, as a clear indication that changes are indeed coming. “The important thing here is that everyone in the industry appears to agree that participant ed-
ucation and clear disclosure of plan options and costs are a top priority. This is what we are hearing from our clients, business partners and regulators. WMSI will support clients in conforming to the regulatory directive and to do what is right and prudent for participants trying to retire.”
Wealth Management Systems Inc. 110 Leroy Street, 5th floor New York, NY 10014 973.241.5882 firstname.lastname@example.org www.wealthmsi.com
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A Talented Team Means Success
he Suit asked David Duchesneau what he considers to be the highlight of his career. Without hesitation he said, “That’s easy – bringing together the talented staff at Argent Wealth Management, LLC.” This full service investment, tax and financial advisory firm includes attorneys, CPA’s, CFA’s and Certified Financial Planners. “Our team is focused on creating success for our clients,” said Duchesneau, president of Argent Wealth Management, LLC. “Currently, we have a healthy mix of experienced industry veterans and young professionals – and we are committed to mentoring our up-and-coming talent to best prepare them for future roles. They are the future of the company.” The Massachusetts-based firm opened in 1992 with Duchesneau at the helm and primed for action, with extensive experience in tax and financial planning for high net worth individuals and businesses. From the onset, he determined the course of the firm’s investing strategy: It would be based on a financial planning perspective unique to each client’s specific situation rather than solely focusing on “generating alpha” or “creating beta” across all portfolios. “We establish goals for clients and align their portfolios consistent with
by judy magness
those goals and their level of risk tolerance,” said Duchesneau. “We use risk management tools so that we, and our clients, have a better understanding of exactly the amount of risk that is inherent within their portfolios.” Argent Wealth Management, LLC is an independent fee-only firm and as such, they select investment options that are in the best interests of their clients, while at the same time, providing full disclosure of any potential conflicts of interest. According to Duchesneau, “So many investment vehicles that used to lack transparency now have it.” Citing hedge funds as one example, he explained, “There are a number of hedge funds that do business in the form of mutual funds, and you get significantly more transparency than with a hedge fund that is not in the form of a mutual fund.” Argent Wealth Management, LLC provides additional benefits, as well, since Duchesneau, a Certified Financial Planner and a licensed CPA in Massachusetts, is also licensed to practice law in Massachusetts and Connecticut.
by diane alter
GOALS, VALUES AND VISION
Finding a Fountain of Wealth in Financial Discipline If you were told you could change your financial future for the better by simply adopting one new habit, you’d be interested – right?
arrett R. Morgan, president and CEO of California-based Fountainhead Wealth, has been helping clients form and fine-tune their investing approach with one word and one action: discipline. “Staying disciplined is key to financial success,” Morgan told The Suit. “Our clients share our methodical investing process and recognize that financial success is not an end – it’s a means to an end.” Morgan founded Fountainhead Wealth in 2005, after spending several years as a financial adviser and planner at a big Wall Street multinational company. His intention was to offer a more holistic, transparent and intimate investing environment. As a certified financial planner, Morgan recognizes the fact that investors are going to make mistakes and his intention is to reduce those slip-ups by addressing clients’ conduct. “Investors’ greatest risks often come from their own bad behavior,” Morgan explained. Indeed, renowned investment theorist Benjamin Graham famously said, “An investor’s chief problem – and even worst enemy – is likely to be himself.”
Through regular communication and education, Morgan keeps clients focused on goals, values and vision. “Our clients have the same deeply rooted values that we all share at Fountainhead. The things they care about are the same things we care about. At the core of the pursuit for wealth is our fundamental belief that values matter. Our values mold and monitor everything we do and they bring significance to our lives. Our mission at Fountainhead is to help clients see money, and the accumulation of wealth, for what it is and has always b e e n meant to be. That is to help fulfill life’s purpose.” Fountainh e a d uses a
tried-and-true six step process dubbed Wealthology. Step one is clarity, which involves getting to know a client and vice versa. Step two is attaining a clear understanding of a client’s values, followed by dynamic strategies to create an effective and efficient financial plan in the third step. Next comes action and accountability. “We both must be committed to attaining effective action for accomplishing all the necessary steps,” Morgan explained. “Basic principles lead to successful investing, which helps us be good money managers. It also leads to good clients.” Step five is wealth actualization. Fountainhead believes wealth is intended to serve – not to be exploited. And step six is sustainability, or holding on to your wealth. Holding on with this unique methodology has served clients and Fountainhead well for nearly two decades. To be sure, Morgan and his team have changed the way scores of people look at investing. But the altruistic Morgan has a higher aim, “I truly want to change the way the world thinks about financial planning.”
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by diane e. alter
BEGINS AT CAPITALQUEST
Moving People to Give to a Good Cause Global charities have grown in number in recent years, garnering a great deal of attention – thanks to the backing of some high profile celebrities and prominent individuals. More and more people are recognizing the many vital services charities provide. Their operations are so big that during 2012, total giving in America alone amounted to more than $316 billion, about 2% of GDP, and a 3.5% increase from the prior year, according to Giving USA 2013’s annual report on philanthropy.
4662 Gravelly Hills Road Louisville, TN 37777 800-263-1976 800-949-9499 (fax) email@example.com www.capitalquest.com
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That’s some very serious money going to help some very serious causes. Helping people and organizations with their fund raising efforts is CapitalQuest, a national fundraising consulting firm headquartered in Tennessee. CapitalQuest operates the most comprehensive website dedicated to capital campaigns for charities. This site originated in 1997 as a marketing vehicle for Capital Quest Inc. and has grown into a comprehensive educational site for organizations considering a major capital campaign. Site traffic has since swelled and it is now one of the web’s most comprehensive and trusted sites for information on non-profit capital campaigns. A premier consultant in the capital campaign process, CapitalQuest helps clients design goals for the present, look ahead and also plan beyond their campaign goals. “Capital campaigns are built on vision, mission and dreams – all strong motiva-
tors to give,” CapitalQuest’s founder and president, Bill Krueger, told The Suit. “People like to give for what ‘could be.’ People don’t like to give to pay for something that’s already there.” To be sure, smart givers don’t respond impulsively, and don’t drop money into canisters at check-out counters. They know it’s critical to find out beforehand whether charities are fulfilling their missions and actually providing a public benefit. Potential donors want to know about a charity’s programs and how their money is being or will be used. “Our clients are those with a mission of raising between $2 million and $20 million for various non-profit programs,” Krueger explained. “Most are fund raising for things like a children’s museum, community hospital, hospice facility or a Ronald McDonald house.” CapitalQuest’s website is a wealth of invaluable information, guiding fundraisers from start to finish. Included on the site are sample materials, training guides and articles related to managing a successful capital campaign. The site also serves as a place where non-profit organizations can engage in discussions about fund raising. Additionally, non-fee workshops are offered. “The most successful fundraisers start with people who have a real passion for what they do. They have reasonable goals and know what they’re going to do once the funds are secured. They don’t build first and expect to pay for the costs later,” Krueger emphasized. Krueger says he feels blessed. His successes stem from his unwavering passion of helping charities raise funds for those in need. That fervor not only helps him sleep well at night, but also has him jumping about of bed every morning. It’s good to be blessed, but it’s even better to be a blessing to others.
Retirement & Portfolio Planning:
hile the current standard for a financial planner’s client roster is to cap off the list somewhere between 100 and 150 clients, there are professionals in the financial services industry who are ignoring that idea. This, despite the trend being one that is touted at the bulk of professional development conferences being held. One such planner is Ellis Liddell, the CEO of ELE Wealth Management LLC in Southfield, Mich. “My vision was to grow our firm to be in a different space than the Charles Schwab and Merrill Lynch,” Liddell said. “I wanted to have lots of clients. We now have more than 2,000 clients.” He’s known since childhood that financial planning was his career destination. It started at age 12, when he took advantage of a small tear in the envelope housing his mother’s tax return information. Liddell surreptitiously removed the paperwork and filled out the forms for his mother, who unknowingly turned them in to her accountant. The accountant quickly surmised that the forms were not in her handwriting – but more importantly noted that they were filled out perfectly. “He told her, well, it looks like you don’t need me anymore,” Liddell recalls with a chuckle. “She told me not to touch her paperwork anymore. But at least I knew I did it correctly.” In 1980, fresh out of college, Liddell worked in Equitable, in its three-year training program. In his third year, he was named the C Class Agent of the Year or the top person in the class. For Liddell, that was confirmation that he had aptitude for sales of financial products in addition to an aptitude for financial knowledge. After several stints with insurance companies and banks, Liddell started ELE in 2001. With Series 6 and 7 licenses and an insurance license, he was ready to create a full service firm. He remembers meeting every Monday morning with the board to discuss the growth of the company and his vision. “Ultimately my goal was to get up to 20 employees and offer services from mortgages to insurance to 401K advice. We now offer all of those services and of the original 20 employees we hired, 13 are still with us. Managing to maintain staff is one of my most proud accomplishments. In a business that is generally characterized by a lot of turnover, we have managed to create stability.”
18700 W. 10 Mile Road, Suite 100 Southfield, MI 48075 Phone: 248-356-6555 www.elewealth.com
Results & a Relationship – Plus Privacy
opping scores of New Year’s resolution lists, year after year, is an entry for “getting my finances in order.” To be sure, we keep hearing how important it is to save more money. People are living longer, and many are likely to outlive their savings. Saving for a healthy retirement is complicated! Taxing matters, changes to healthcare coverage and fluctuating retirement plan requirements lead to quite a bit of confusion. There’s a lot at stake here, and the stakes are very high. After all, we’re talking about people’s lives. That’s why professional help is paramount when plotting a retirement course. Helping individuals in Ontario, Canada with all facets of retirement and portfolio planning is Julie Kranitz-Andrade, president of Wealth Maximization Group. A high-energy, driven individual, Kranitz-Andrade said that her clients share those same traits. “My clients are willing to invest the time, money and vigor needed to achieve their goals,” Kranitz-Andrade told The Suit. “We have to be a good, trusting fit to truly succeed. Because that’s what I, and my clients want: results and a relationship – plus privacy. I take clients’ dreams, personalities and financial data, and work to produce a blueprint that maximizes results. People don’t take the time to focus on finances. That’s what we do.” Kranitz-Andrade and her team provide a broad range of services and products to help the firm’s diverse client base each meet their unique needs. Offerings include investment optimization, wealth maximization planning, sophisticated wealth management services, critical illness insurance, segregated funds, long term insurance, annuities, business insurance, life insurance and disability insurance. “We plan appropriately, running different scenarios and projections to help clients make educated decisions before retirement. Also, so that there are no surprises,” Kranitz-Andrade explained. “What we offer isn’t a single product or investment vehicle – it’s a carefully created strategy.” Helping clients reach goals and improve their financial situation is what motivates Kranitz-Andrade. “If I can say I’ve made a real difference – if clients can say they are in a better position and have confidence and clarity around their finances – then I’ve done my job.” Her satisfied clients are ample proof of a job well done. Mutual funds provided through FundEX Investments Inc.
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by amy m. armstrong
Standard & Poor’s Isn’t Their Client management of client accounts
n the post-Bernie Madoff investment world, investors have become more and more apprehensive regarding the custody and management of their accounts, and much less reluctant to express their concerns and ask pointed questions. In Dec. 2013, the Wall Street Journal featured an article addressing how Madoff’s multi-billion dollar Ponzi scheme continues to impact the relationship between adviser and client. It clearly outlined how Madoff’s downfall has made advisers more receptive to client questions. It’s an approach that Dryden and Laila Pence of Pence Wealth Management (PWM) in Newport Beach, California, say they’ve taken all along. “Helping Protect our clients’ wealth has always been our first priority,” Laila Pence said. At a time when many other financial advisers are opting for third-party management, PWM, one of the leading wealth management firms in Orange County, California, continues to keep account management in-house. It’s a holding point Dryden and Laila Pence firmly stick with, since they believe that their clients – the bulk of whom are high-net worth – are better served by doing so. ADVISORS MAGAZINE - MARCH 2014
“We are the managers,” explained Dryden Pence, the firm’s chief investment officer. “We have found our clientele are tired of hearing from advisers that they cannot answer a question and need to get a hold of some manager elsewhere. Our clients prefer to be talking to the people directly managing their money on a day-to-day basis. They know who to talk to directly when they have a question: Us. Our team.” The Pences use LPL Financial – one of the leading financial services companies and the largest independent broker/dealer in the nation* – to handle the custody and clearing of the transactions of investments that the firm’s investment team recommends and executes on behalf of PWM’s clients. Both Dryden and Laila Pence are registered principals with LPL Financial and are highly comfortable utilizing LPL’s services, especially since it does not offer its own financial products – thus removing any possibility of bias. This dynamic couple must be doing something right. Since joining forces in marriage in 1999 and in the financial industry with the formation of PWM in 2001, they’ve built a team of 24 employees – 8 of whom are advisers. The firm currently manages more than $1
Billion in client advisory and brokerage assets. Laila Pence was named Orange County’s number one wealth manager by the Orange County Business Journal1 in both 2012 and 2013. In June 2012, Barron’s Magazine2 listed her as 10th on its list of Top 100 Women Advisers nationwide and she was ranked number 76 in the Top 100 Independent Financial Advisers nationwide in August that same year. She concedes these accolades are nice, but only noteworthy in that they point to great performance of the firm on behalf of its clients. For Pence Wealth Management, it’s all about cash flow – how much clients need and how the PWM investment team seek to select investments to provide that cash flow over the long term. “Many of our clients are retirees looking to maintain their income. Our clients are more interested in consistent return versus necessarily beating the stock market,” she explained. That has been her focus since starting in the financial services industry 33 years ago and it is the focus that Laila and Dryden Pence employ within PWM. “This is what we do and this is why we have grown so dramatically – because our focus is on cash flow.” Dryden Pence said that too many
people focus on how their individual investments are doing by comparing performance to the results of the S&P 500. Half chuckling, he responds with, “I don’t care what the S&P does. The S&P is not my client. YOU are my client. I am concerned with what your portfolio does.” The bulk of PWM clients have a minimum of $500,000 in liquid assets and for those assigned to Laila Pence, the lower limit is $2 million. To customize the right fit, the advisors at PWM begin by establishing a “personal index” for each client based on income and expenses. This index also includes each client’s goals as the leading factor in determining the kind of cash flow stream that clients will need to maintain wealth. Wealth means different things to different people. And yet, wealth itself has the same definition for Dryden Pence, “It is being able to do what matters to you most, when you want, for as long as you want.” To maintain wealth for PWM clients, Dryden Pence is continually scrutinizing new opportunities, and he isn’t opposed to using Exchanged Traded Funds (ETFs) in a portfolio, provided they are concentrated to a specific industry or idea. Basically, he wants to
make sure that the ETF is comprised of quality holdings throughout, although he knows that isn’t always possible. Pence told Barron’s in November 2012, he takes a long look at the top 10 to 15 holdings in an ETF and only if they comprise about 50% of the ETF. Laila Pence agrees. “To the extent that they are concentrated and not contaminated by too many holdings that are not effective, we like ETFs. But they have to be very specific for us to use them.” One example Dryden Pence provided to Barron’s of the type of ETFs he looks for, involves the transportation industry. “That theme alone might even be too broad,” he noted. “It could involve various forms of freight transport – rail, plane or truck. The first does well when oil prices are higher than $78 a barrel. The other two transportation modes may struggle to make ends meet at higher prices for fuel. If an ETF labeled transportation has assets in all three modes, chances are likely that any gains in one will be negated by losses in the others.” As he told Barron’s, “It’s when you have these big themes that you really have to look at the composition of an ETF versus its contamination point. If you want to be rails, just be rails.”
Staying focused on client goals is what PWM intends to do to reach its 2014 goal of growing the firm by 20 to 25 percent. “We welcome the growth but we want to be sure to maintain the current level of client service,” Laila Pence said. www.pencewealthmanagement.com Laila Pence & E. Dryden Pence III are Registered Principals with and securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through LPL Financial, a Registered Investment Advisor. No strategy assures success or protects against loss. An investment in Exchange Traded Funds (ETF), structured as a mutual fund or unit investment trust, involves the risk of losing money and should be considered as part of an overall program, not a complete investment program. An investment in ETFs involves additional risks such as not diversified, price volatility, competitive industry pressure, international political and economic developments, possible trading halts, and index tracking errors. ETFs concentrating in specific industries are subject to higher risks and volatility than those that invest more broadly. *As reported in Financial Planning Magazine, 19962013, based on total revenue. “ 1 Orange County Business Journal rankings are based on Barron’s rankings. 2 Barron’s rankings are based on assets under management and the quality of the advisor’s practice.
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by annabelle preston
LENDING A HAND TO
Asset-based Lending: When Traditional Lending Fails
The credit crunch following the Great Recession of 2007 to 2009, along with the three-week government shutdown in fall 2013, are both reasons why asset-based lending now takes its place among more traditional forms of financing. This is particularly true for the small business sector as explained by Bloomberg, which noted in its reporting that tighter lending standards have a crippling effect on the efforts of small business to drive economic stimulation. Cash flow is critical to small businesses and if it can’t be found from banks or government programs, then entrepreneurs will be – and are – forced to look elsewhere. That’s where CEO Cole Harmonson and his team at Far West Capital, based in Austin, Texas, enter the picture. “If you can obtain traditional capital to accomplish your business goals, then nine times out of ten you are going to go ahead and sign up,” Harmonson said,
an asset-based loan that pays down automatically as you go through your normal routine of business. It allows business owners to get the capital they need while staying focused on growing their businesses.” An asset-based loan is a credit vehicle that works pretty much just as it sounds. The line of credit is secured by the company’s assets such as inventory, receivables, equipment and other balance-sheet assets. With clients nationwide and offices in Austin, Dallas, El Paso, Houston and Phoenix, Far West Capital works with a wide range of businesses. While Harmonson said that the firm considers itself to be generalists, willing to work with any sector with no minimum requirements, they do have a specialty niche in servicing the construction and transportation industries. The firm’s portfolio also includes manufacturing, wholesale distribution, staffing and consulting. Their largest client has more than $15 million on Far West Capital’s books. “We will help anyone that has good, clean receivables and is looking to solve a timing problem regarding their capital and financing needs,” Harmon-
AT FAR WEST CAPITAL, YOU GET EXACTLY WHAT YOU NEED FROM A FINANCING COMPANY AND NOTHING LESS. while discussing reasons why businesses need to turn to asset-based lending. “But if you cannot obtain that kind of traditional capital – and you still need to get from point A to point B – then the alternatives are that you either sell equity in your company, giving up a large percentage of your company for a long period of time, or you can look at ADVISORS MAGAZINE - MARCH 2014
son said. The firm began in July 2007 when Harmonson and Don Stricklin, now Far West’s chairman, sold their collective interests in Texas United Bancshares and State Bank, a publicly-traded commercial bank based in La Grange, Texas when it was acquired by another bank. Most of Far West’s management
team worked there together for nearly a decade and collectively, have over 50 years of experience in commercial banking and finance. Both Stricklin and Harmonson have deep roots in financing and commercial banking. Stricklin was a national bank examiner for the Office of the Comptroller of the Currency and a former director of The Independent Bankers Bank in Irving, Texas. Harmonson was vice president at The National Bank of Texas, joining State Bank to create and run its asset-based lending and factoring division. Right after graduating from Texas Tech University in Lubbock, Texas, Harmonson’s interest in asset-based lending and factoring immediately began to guide his career. “I worked for this bank that had a lending group. They weren’t doing much with it and it piqued my interest, so at age 22, I asked that bank if I could run it,” Harmonson said, laughing before making the next statement. “Shockingly, they said, ‘No.’ ” That denial only made him more interested in the field of asset-based lending and factoring, and the missed opportunity only made him more receptive to the idea of opening doors for others. “The main focus of our business is the entrepreneur we are doing business with,” Harmonson said. “What is his or her story – and how can we help that individual find the resources to unleash the potential inside that is not being recognized? That is our question and answering it is our goal.”
Local Boy Values
Boston’s Middle Market Commercial Real Estate
iddle market commercial real estate in the Boston, Mass., area continues to attract high net worth investors leery of the stock market since its meltdown in 2008. These investors look to put their monies in to under-valued or poorly positioned properties in which an immediate gain is feasible. According to various reports from area media including The Boston Globe, the Boston-area office market is nearly recovered from the Great Recession of 2008 and 2009 and many small to mid-size firms actively seek office space in a business market that is experiencing some economic upturn. Yet there remains a significant inventory of distressed commercial properties. It’s good news for commercial real estate investors such as Jay Hirsh of Jumbo Capital Management. He’s a native Boston son, having never left the Commonwealth for more than two months in his life, he proudly claims. When he’s evaluating the possibility of Jumbo purchasing an under-valued, distressed or improperly placed piece of real estate in the greater Boston Metro, he’s working his back yard. “I know all the players, the landlords, the tenants,” Hirsh said. “I am driving by these buildings all the time. I know the inventory.” It’s exactly the position he’s wanted to be in. After a few years of handling New England acquisitions and identifying value-added opportunities for a larger firm, Hirsh decided to form Jumbo early in 2009. They named the company in honor of Hirsh’s college alumna mater, Tufts University and the long-time mascot Jumbo the elephant. He recalls being in college, kicking back enjoying a beer or two after class and telling himself that someday he would start a real estate firm and name it after Jumbo. Today, that dream is a reality, such an easy achievement. Landing those first few deals were tough, he admits. “It was very difficult at the beginning to cultivate the track record and demonstrate to potential investors that we knew what we were doing and that we can generate returns,” Hirsh said. “It was not so much about finding the opportunities. They were and still are there. It was about finding the equity to capitalize. But over time and as we did more deals, our name got out there and we demonstrated to investors the specific returns we have generated and it started to snowball from there.” He prefers to identify a handful of projects within the same municipal boundaries to work on in conjunction. This allows him to get to know zoning officials and discover what hurdles he must cross with zoning boards to bring a project to fruition. He’s typically looking at commercial real estate selling between $3 and $20 million. It’s a market the larger firms tend to stay out of, he said, leaving him with less competition yet the opportunity to land properties that may already have tenants which equal immediate cash flow for the investors he represents. ADVISORS MAGAZINE p.67
by amy m. armstrong
A Customized, Conservative Culture
ecent surveys conducted by Franklin Templeton and Forbes indicate that investors on the whole – but especially baby boomers reaching retirement – are indeed taking a much more conservative investment approach. Indeed, Rajesh Gupta, together with his partners Richard Sanchez, Ronald Lenihan and Edward Sullivan, has taken more than just a few notes on that subject, since it typifies their approach to investment and wealth management. Blame it on the bear market in the early 2000s, or attribute it to the financial meltdown from 2007 to 2009, the resulting lessons have led investors and financial advisers such as Gupta to become well-versed in wealth preservation. In some respects, this shift from “alpha” investing to a more customized, conservative and client-specific approach, in Gupta’s opinion, does find its roots in the aging of Americans. “The clientele in most of the developed
ADVISORS MAGAZINE - MARCH 2014
nations of the world – and most certainly this is true here in the United States – is aging. Typically, when a population ages, they tend to become more conservative,” Gupta said in reference to baby boomers – those born between 1946 and 1964, now turning 65 at a rate of 10,000 per day, according to Pew Research Center. “Typically, when they have been through difficult times in the recent past, their thinking changes from ‘hey, let’s just generate the highest alpha’ to ‘let’s just make sure we are protected in case we have a recurrence of what happened in the early 2000 time period or in the 2007 to 2009 time period.’ The pain is fresh in their minds.” As one of the managing partner of SeaCrest Wealth Management, he must be doing something right for his clients. In 2012, Forbes recognized the wealth management company as the 12th fastest growing advisory business in the nation. At SeaCrest Investment Management,
Gupta wears two hats – chief executive officer and chief investment officer. Together with Sanchez and Lenihan, he started the investment side of SeaCrest in 2006 after nearly 19 years with Morgan Stanley Investment Management, where he worked in increasingly trustworthy leadership roles, including managing director; head of global fixed income, overseeing $180 billion plus in assets; head of alternative investments, formulating and implementing expansion plans, growing assets from $3 billion to $9 billion in 3 years; as well as chief administrative officer, overseeing the integration of four investment departments. During those two decades at Morgan Stanley, Gupta gained invaluable experience – experience he used to guide the founding of the SeaCrest group of companies. One of those guiding principles was based on the fact that large investment firms tend to offer clients plans that are too much alike. “Large firms provide generic solutions to most of their clients,” Gupta said, so with the addition of Sullivan to the management team, he began SeaCrest Wealth Management – even in 2008 at the height of the economic meltdown – by providing customized, individualized investment plans to clients. “Our typical clients are those looking for a good long-term customized solution for their investments,” Gupta explained. Now, seven years later, SeaCrest, based in Purchase, New York, oversees more than $850 million in assets with wealth advisers in 11 different states. The Firm’s philosophy has worked well, even in hard times. Part of his philosophy requires management and the Firm’s financial advisers to spend regular face time with their clients.
“Our goal from the very beginning has been to ensure that we are providing customized solutions to each client,” Gupta said. “The only way to accomplish that is through close and frequent client touch. At the end of the day, authentic client-adviser relationships are created through a process of communication and customization. No two of our clients are looking for the same investment strategy and/ or number of periodic reviews and/ or identical investment policy statements.” Gupta believes a client’s investment policy statement is a living, breathing and dynamic document. He cites the example of one particular client who worked for years in the same industry. During that time, his portfolio was managed using a growth approach with a greater percentage of his assets in equities. After the client retired, he wanted to travel abroad with his family, so Gupta re-focused the portfolio for more of an income approach. He then returned stateside and took on some consulting work and Gupta again made changes reflecting a need to balance growth with income. Just recently, the client went back to full-time work and Gupta has again tilted the portfolio’s investment strategy back toward a growth focus due to the client’s regular income
SeaCrest Global Clean Energy Index – a hand-selected mix involving a weighted equity index of global stocks representing leading companies involved in bio-energy, clean power, energy efficiency, energy management, fuel cells, solar power, water management and wind power. SeaCrest, together with CRD Analytics, LLC., see these industries as potentially high-yielding as social and governmental pressure, along with climate change, continues to increase environmental awareness. Despite the financial struggles markets have experienced in the past five to seven years, Gupta and his partners are optimistic about the future of their Firm and the financial security of their clients. SeaCrest was started amidst the housing bubble debacle – a time of great upheaval and mistrust leaving investors searching for alternatives. “What we saw in 2006 – and we still believe is true for the bulk of the investing world – is that it is largely very standardized,” Gupta said. “Our goal is to change that for our clients. The business that we are in is a great business. To be able to get up every morning having the trust of our clients is rewarding. To see and live the result for our clients is the culture within our firm.”
stream from employment. Throughout this entire process, Gupta’s creative re-focusing allowed his client to live without making lifestyle changes. This is just one example of how customized portfolio efforts by SeaCrest work. Another includes the
ADVISORS MAGAZINE p.69
by judy magness
WANT A REVOLUTION?
Here Comes the Biotechnology Revolution
Photo by Larissa Boiwka
or a man whose doctoral work was in the complex fields of molecular cancer research and bioinformatics, Jeff Spitzner, PhD, president and chief science officer of Amperand, Ltd., used a deceptively simple three-step formula to select a name for his new company: it had to be easy to spell, it had to have a story and it had to start with a letter from the beginning of the alphabet. “It puts you at the top of the lineup when your company appears on a list with other companies,” said Spitzner in support of this proven marketing strategy – used since publication of the first Yellow Pages directory in 1886. In explaining his new company’s story, he added, “Amperand stands for ‘amplify electronic research and development.’” Spitzner came from a science background, but soon discovered that he enjoyed the intersection of business and technology. “Academics is great training, but it is confining, so after my postdoctoral research at MIT, I came back to Columbus, Ohio to start new technology companies, ADVISORS MAGAZINE - MARCH 2014
help other companies grow and start new ventures in healthcare IT,” he said. With more than 20 years of experience as a founder and executive of scientific software and biotechnology companies, Spitzner is a recognized leader in electronic lab notebooks (ELNs), bioinformatics, knowledge management and scientific research. He was named the Technology Executive of the Year at the 2011 Innovation Awards. Launching Amperand in 2012, Spitzner now works with start-ups and existing companies needing assistance with business strategy and guidance in bringing new technology to the commercial marketplace. Amperand helps companies form new products, develop sales and marketing strategies and assists them in finding strategic partners to help finance or distribute their products. “Many inventors believe that because they have the best technology, they are going to be successful. That would be great if it were true, but the key is in understanding what the market wants, how to present it to the market and how to present it in terms of problems that customers want to pay for to solve,” he said. Currently, Spitzner is very excited about Amperand’s collaboration with The Ohio State University regarding a new healthcare information technology, and Signet Enterprises to fund its commercialization. “We will soon announce this new company (codename ‘Signet Accel’) being created to provide big data management for improving healthcare and healthcare research,” he said. While individual inventions in the life sciences can make for great news, Spitzner acknowledges that the real advances often take place behind the scenes, and are more complicated. “The advancement and integration of healthcare and life sciences – combined with information technology, bioinformatics and big data – will create what I call the ‘biotechnology revolution,’” he said. Spitzner predicts that this revolution will “shake things up” even more than the information technology revolution. “Ultimately, it’s going to transform healthcare, computing, energy and new product creations that will help drive the economy, change our quality of life and change our communities for the better and forever.”
by byamy amym. m.armstrong armstrong
Big Failure Leads to Big Success As reported in Forbes Magazine, businesses are staying away from Microsoft’s Windows 8 for their enterprise platforms. Citing what is known in the information technology industry as “upgrade fatigue,” both Forbes and PC World list complaints regarding Windows 8 ranging from requiring far too much user training to the new touch-centric user interface being too complicated and less than intuitive.
oward Reisman, CEO of Heroix based in Braintree, Massachusetts, couldn’t agree
more. “The people who are skeptical of Windows 8 have good reason to be skeptical,” Reisman said. He isn’t using it in his own company’s operation’s – and his company is one that provides support and technical advice to other businesses. As Reisman puts it, “The short of it is, I am not a fan at all.” Like many other professionals in the information technology industry, Reisman believes Microsoft rushed Windows 8 to market because of pressure created by new product releases from Apple and Google. “The (Windows 8) software isn’t mature and from what I have seen, I don’t think Microsoft has done a really good job of fixing any of its problems.” Having said that, Reisman’s firm still remains a Certified Partner with Microsoft – and he still sings the praises of Windows 7. Most of his clients still use it. “People tend to be slow adapters and many of them will stay with Windows 7 just as long as they can,” Reisman explained. “That will be years and years. I don’t see the commercial users going to Windows 8 at all. They will skip over it and wait for the release of its upgrade.” (Remember Vista?) Reisman himself doesn’t wait to de-
pend on other software manufacturers to design what works for his business – and what works for his business, works for many others, too. Longitude is proprietary software for his company, Heroix. Running on many different platforms, it monitors networks, operating systems and applications for availability and performance. The software features a single dashboard displaying the real-time results from monitoring a system’s physical, virtual, network and application layers. Eminently intuitive, it can be installed, used and understood, even by non-technical staff, and is scalable to the enterprise. Longitude is a software gem that Reisman created after a massive success turned into an even bigger failure for his firm. It’s part of why he can identify with Microsoft’s current plight where Windows 8 is concerned. “Our product before Longitude was my greatest failure that started out very successful at first,” Reisman said. “We got a pretty large user base initially and they were very vocal in asking us to keep adding functionality. We did this without consideration of the complexity it was creating and it eventually became too unwieldy.” The experience made him re-think the software design process. In designing Longitude, Reisman established a set of design principles and stuck to them despite plenty of requests for adding various features. “The result,”
he said, “was a cleaner, crisper product, much easier to maintain and one with higher, longer lasting user satisfaction.” Its name reflects lessons Reisman learned well. He mentions how sailors in the 1700s frequently lost their way at sea due to a lack of longitudinal direction. Eventually an extremely accurate clock was created that gave sailors a reference point for computing longitude. The more accurate ability to identify location made all the difference in navigation. “Knowing where you are at can be difficult and complex,” Reisman said speaking from personal knowledge. “The idea is that our product helps businesses identify exactly where their critical computer systems are at and lets them know how to get them to the performance level needed.”
Heroix 165 Bay State Drive Braintree, MA 02184 Phone: 800.229.6500 www.heroix.com
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by diane e. alter
Great Promotional Product Boost Brand Recognition
romotional products are the perfect way for a company, business or organization to introduce themselves to a wide variety of people in whimsical, useful and memorable ways. Few advertising methods provide a better first impression and have such a lasting impact as a promotional item given by a business. Plus, giving branded merchandise to existing and potential customers creates goodwill and implants brand recognition. Flexible Innovations, Ltd. has been helping a wide variety of businesses grow and promote themselves by providing memorable, useful and innovative promotional products. “We’ve been in business since 2002, and in the promotional products industry since 2006,” Fred Antonini, general partner of Flexible Innovations, headquartered in Fort Worth, TX, told The Suit. “Thanks to the Internet – and to the fact that our name comes up first and frequently in searches – we’ve grown into a truly global company.” According to Antonini, what makes Flexible Innovations truly stand out among its competitors is the belief that every marketing department’s goal is to get the message about their company, service or product to their existing customers and to new prospects. “The useful ‘techie’ items that we sell are attached to print media – including direct mail, invitations and tradeshow announcements. When an item
is attached, it subconsciously obligates the recipient to notice, and read the message. The company has achieved its goal and the item serves as a reminder of what was read,” Antonini explained. Flexible Innovations also stands out in the highly competitive, crowded promotional marketplace because of the uniqueness of its bespoke product offerings, like its consumer products made from the world’s most advanced non-slip material – called egrips. “When people first come in contact with egrips technology material, their most common reaction is to ask what it is,” Antonini noted. “It’s made from a specially formulated dimpled silicone material that has an extremely high amount of friction. It prevents things such as smartphones, laptops and coffee cups from slipping around on dry surfaces like car seats, counter tops, desktops, boats and even your shirt sleeves.” This product has even been used by motorcycle racing teams, who put them on the tanks “to give them leg control and position them securely when racing,” Antonini added.Part of the appeal of egrips is that it outperforms any non-skid material currently on the market. Easy to put on and take off, stickers and strips made of egrips are long-lasting, stay clean – and are made in the USA. Businesses love their functionality. And businesses also love the fact that these full color, custom-made egrips anti-slip stickers and
non-slip strips promoting their name or brand, will be seen often. Another widely popular Flexible Innovations product that is also made in the USA, is its DigiClean microfiber smartphone screen cleaner sticker. The explosive smartphone and tablet market has definitely boosted sales. “Look at your computer screen or cellphone right now. Even if it doesn’t look dirty, it’s covered with dust and oil from your hands and skin,” Antonini added. “These screen wipes are excellent at removing makeup, fingerprints and dirt. We’ve sold millions and millions of these.” These are only two examples from among the products that Antonini offers. Such promotional products are great at doing exactly what they’re designed to do. They draw attention, increase brand recognition, create exposure and promote a favorable image. A Baylor University study found that companies using promotional products to create a favorable impression do 22% more business than those that don’t. To be sure, promotional products are a cost-effective and efficient form of advertising. Products that are interesting, innovative and fun, like those from Flexible Innovations, can have an even more profound effect because people enjoy using them. And it is a great service, too, that many of Antonini’s products are made in the USA.
1120 South Freeway, Ste 132, Ft. Worth, TX 76104, USA ASI: 54596 - PPAI: 312814 - UPIC: Flexi01 - Sage: 67855 www.flexinno.com ADVISORS MAGAZINE - MARCH 2014
by a. marie velthuizen
Clients not Customers
Relationship not Price In post-Great Recession America, price seems to be the driving force for decision makers – particularly when it comes to purchasing insurance. Television and the Internet are overrun with advertisements from long-standing insurance companies, as well as the new players in the industry, all touting their policies as being the least expensive.
et, as CNN Money warns, price is not always the best parameter for judging the efficiency of an insurance policy. This holds true whether it be for business, home, auto, health, life or even specialty products such as wedding or travel insurance. Tom Murry, president of El Dorado, Kansas-based ICI Insurance, couldn’t agree more. He’s pretty annoyed by the constant bantering offering “cheap” policies. In his experience, cheap doesn’t equate to the kind of protection or service a client deserves. Murry does not call them “customers”. He feels strongly that insurance protection is a contract requiring personal and professional help for their clients. “You see it so much on television and the Internet: ‘Buy from me because I am cheap.’ ICI recognized this was wrong and created an internal culture that is focused on the relationship. The ICI “ideal client” has one phone number for their insurance program. The relationship is based on mutual trust, respect and appreciation. Price is important, but not always the primary factor. That’s why they retain almost 94% of their personal and commercial clients.
ICI is also strongly committed to continuing education for their staff. This allows them to bring a greater service to their clients. There are 6 CIC’s (Certified Insurance Counselors) and 8 CISR’s (Certified Insurance Service Representatives). Some of the staff have been with the company for over 25 years. The team is deeply committed to “giving back” to the communities they serve. Staff members have served as Presidents of economic development committees, Chambers of Commerce, United Way, state associations, hospital boards and adopt a school programs. As a broker ICI has access to over 50 insurance markets to make available to their clients. This allows them to mix and match coverage while placing the best program on behalf of their clients. In his neck of the woods, located in this country’s midsection, hail and wind are the leading culprits for property damage. There’s precious little – other than pray – that the insured can do to prevent Mother Na-
ture’s fury, Murry concedes. But the insured can take steps to keep the weather from adding to their premium woes by maintaining their property in good working order. Murry states “you can’t control hail”, but you can control work comp, liability and automobile losses. ICI commercial clients are seeing significant reductions in their claims activity as a result of their new “Three Sixty Safety” program. ICI is the exclusive Kansas partner of the Michigan based program. “I feel as if this is one of the most important things we have done,” Murry said. “The best policy is the one you don’t have to put in a claim for.”
El Dorado | Derby | Emporia Wichita 316.321.5600 ext. 110 firstname.lastname@example.org www.icblueskies.com
ADVISORS MAGAZINE p.73
by diane e. alters
Providing Solutions in an Era of
Robert James Cimasi, CEO and founder
Healthcare is, perhaps, the most heavily regulated of all industries,” Robert James Cimasi, MHA, ASA, FRICS, MCBA, CVA, CM&AA, the CEO and founder of Health Capital Consultants, explained to The Suit. “Accounting for 20% of the country’s gross domestic product, the healthcare industry encompasses a broad swath of the American economy. Staying on top of the scope of complex capital market conditions and the vast array of volatile regulations that govern healthcare can be daunting for decision makers in the healthcare industry. Every segment and aspect of the healthcare sector is regulated by several agencies – often with overlapping jurisdiction. Healthcare professionals frequently spend increasing amounts of time on sorting out how to pursue operational activities and transactional oppor-
ADVISORS MAGAZINE - MARCH 2014
tunities while ensuring that they are in compliance with the regulatory environment that governs the markets in which they operate,” Cimasi continued. Early on, Health Capital Consultants (HCC) recognized that the healthcare industry’s environment of constant change required the skills of a new kind of healthcare consulting firm that could work seamlessly with inside general counsel and outside law firms that advise healthcare clients to ensure that the clients’ activities were conducted in a matter that was legally permissible and defensible under regulatory scrutiny. This led to HCC’s building an integrated team of financial analysts, healthcare economists, business valuators, regulatory counsel, intermediaries, and researchers, who have both the technical skills and experience to competently and consistently respond to client
needs in a cost-effective, timely manner. Founded in 1993, HCC developed and maintains significant staff resources comprised of experienced professionals with strong credentials; a dedication to the discipline of process and planning; and, an organizational commitment to quality client service as the core ingredients for the cost-effective delivery of professional consulting services. HCC has served a diverse range of healthcare industry and medical professional clients in over 45 states, including hospitals and health systems (both tax exempt and for profit); outpatient and ambulatory facilities; accountable care organizations (ACOs); managed care organizations; management services organizations; group medical practices in a full range of medical specialties, subspecialties and allied health professions; ancillary service providers; federal and state agencies; and, advisory professionals for those clients, including their legal, accounting, and consulting firms. Headquartered in St. Louis, HCC is a nationally recognized healthcare financial and economic consulting firm specializing in the valuation of healthcare enterprises, assets and services; financial and feasibility analysis; merger and consolidation in hospital/physician integration; development of emerging healthcare models (e.g., Accountable Care Organizations, Medical Home, Co-Management and PSAs); and, litigation support and expert witness services for healthcare providers and their advisors. Cimasi explained, “Clients rely on HCC to develop the requisite analysis and robust due diligence to determine whether transactions are financially feasible, while also
meeting the regulatory thresholds of fair market value and commercial reasonableness. We analyze every aspect of each deal to assure our clients are fully informed in their decision making process.” Cimasi brings more than 30 years of healthcare industry experience into each engagement. He holds a master’s degree in health administration from the University of Maryland in addition to a number of professional certifications and designations from the premier valuation and merger and acquisition professional societies. Cimasi has also served as an expert witness in numerous court cases, and provided testimony before federal and state legislative committees. A nationally recognized speaker on healthcare, Cimasi is the author of seven nationally published books, including the newly published “Accountable Care Organizations: Value Metrics and Capital Formation” [Taylor & Francis 2013], and the recently released “Healthcare Valuation: The Financial Appraisal of Enterprises, Assets, and Services” [John Wiley & Sons 2014]. In 2006, Cimasi was honored with the prestigious Shannon Pratt Award in Business Valuation. He is the current Chair of the American Society of Appraisers Healthcare Special Interest Group Subcommittee, and is the Vice Chair of Research for the American Health Lawyers Association (AHLA) Accountable Care Organizations Task Force. Without question, the rollout of the Affordable Care Act (ACA, aka Obamacare) has dramatically changed the industry’s landscape, with a significant impact on each of the “Four Pillars” of healthcare value, a concept Cimasi has coined to explain the influence of reimbursement, regulation, technology, and competition on healthcare value. These changes are driven by concerns related to increasing healthcare premiums and costs; unparalleled concern about fiscal deficit and unprecedented political fixation on the federal public debt; the looming physician manpower shortage; and, the capacity of the current U.S. healthcare delivery system to meet the growing demand for services from the aging baby boomer demographic. “HCC's services have never been more needed, important, and in demand. Clients benefit from our experience; our field-tested, refined methodology; our robust research and analytical resources; and, from the discipline of our process. In fact, in many aspects, ‘our product is our process.’ These are exciting times for the healthcare industry, and I foresee significant opportunity ahead for HCC and our profession,” Cimasi concluded. 1143 Olivette Executive Parkway St. Louis, MO 63132-3205 Toll Free - (800) FYI-VALU [394-8258] www.healthcapital.com
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by diane e. alters
Fixing the Thorny Issues of Medical Billing
edical billing outsourcing companies have emerged as major figures in the healthcare industry over the last decade. Designed to help healthcare providers increase cash flow and lower receivables by streamlining the payment process, medical practices and hospitals are turning to these services now more than ever for security reasons, to optimize revenue, reduce errors and free up precious time to provide quality care. From digitized medical records to the mountainous volume of insurance claims, today’s medical billing landscape looks different indeed. “Changes in the insurance industry command even stricter cost management, efficiency and expertise,” Diana Polyakov, founder and CEO of Midwest Healthcare Management, Inc., told The Suit. “We do that while maintaining a high level of client satisfaction. We specialize exclusively in providing clients with the finest medical billing services available.” Formed out of a desire to create a dynamic, quality-orientated practice management company, Polyakov is just as dedicated two decades later, as she was when she launched Midwest Healthcare Management, Inc. in 1994. “While I can afford to be selective in the clients I take on, I still find that I can’t turn away clients that are too small to be profitable. Unquestionably, I bring more to the table than some clients. But I got into this business with a passion to help where I am needed,” Polyakov shared. The passionate team at Midwest consists of trained medical billing experts who understand the plethora of pressures facing the healthcare sector – such as the high cost of ADVISORS MAGAZINE - MARCH 2014
doing business, the complexities of managed care programs and unfair insurance strategies. Billing specialty areas include internal medicine, family practice, cardiology, gastroenterology, pediatrics, rehabilitative medicine and psychiatry. Services run the gamut from claim submission, through follow up, insurance appeal, verification of benefits, to end of month practice reports, processing patient credit card payments as well as fee analysis and management. Separating Midwest Healthcare Management from the pack is its unwavering commitment and willingness to always go that extra mile to get the desired results. Underscoring the need for industry experts like Polyakov are some eyebrow-raising stats. According to Stephen Parnete, a professor of health finance at the University of Minnesota who has extensively studied medical billing, roughly 30-40 percent of medical bills contain errors. Boston-based health care advocacy group, The Access Project, pegs this figure at closer to 80 percent. Costly to healthcare providers and consumers alike, medical billing errors mar the credit reports of some 14 million Americans, according to a 2013 study
Congressman Bob Dold, Diana Polyakov
from the nonprofit The Commonwealth Fund. Moreover, the Federal Reserve found that medical bills account for more than half of all debts in collection. Polyakov remains steadfastly accountable to her growing client base. She credits her attitude and drive for her company’s success – two invaluable traits sorely needed in this challenging industry.
by diane e. alter
TAKING ON THE PROBLEMS
From the Routine to the Extremely Challenging
he need for a good lawyer arises not only when an individual is slapped with a lawsuit or arrested for a crime. When faced with a legal problem or question a person can’t resolve, it’s best – no, it’s imperative – to talk to an attorney. In the Stamford, CT area, the premier law firm that people turn to and talk about is Cacace, Tusch & Santagata, which has been providing legal representation to the area for more than 25 years. Founded with an initial focus on commercial and residential real estate, this flourishing firm has expanded greatly over the years. Services currently offered include land use and zoning, family law, civil litigation, estate planning, administrative hearings and appeals, employment matters, construction law and personal injury. “I started the firm in 1982 and later took on two lawyers who have since become partners,” Michael J. Cacace, founding partner, told The Suit. “As we grew, we only hired the most qualified individuals. Even more important, we are comprised of an elite group that works well together. After all, we work
as a team.” Only taking on cases to which the firm knows it can add value, Cacace explains, “Our objective is to develop long-term relationships with clients by offering them quality legal guidance. Litigation is a long and costly process. We aim to provide results clients will be pleased with.” A graduate of Fordham University and NY Law School, the accomplished Cacace is active in his community, sits on a number of prestigious boards, and has had several cases published. His most high profile case to-date was successfully getting former professional tennis player Renee Richards, who underwent sex reassignment surgery, into the U.S. Open. Denied entry into the 1976 U.S. Open by the United States Tennis Association – citing an unprecedented “women-born-women policy” – Cacace was instrumental in seeing that the New York Supreme Court ruled in her favor in 1977. A landmark decision in favor of transsexual rights, it was also a milestone for Cacace. Today, Cacace, Tusch & Santagata are busy with the growing complexities surrounding legalizing marijuana. Twenty states and Washington, D.C. permit marijuana use for medical reasons. Others are mulling over the effects of legalizing it. Additionally, Colorado and Washington State allow it for recreational use. “The problem is that while states have made it legal, the federal government doesn’t recognize it as such. It’s creating a hornet’s nest for lawyers
who find themselves walking a tricky tightrope. It’s also created a minefield for developers and property owners who own land where marijuana is sold or dispensed,” Cacace detailed. In addition to being a field that will keep lawyers like Cacace busy and challenged, marijuana is a growth industry, projected to be worth $10 billion by 2018. Cacace does not shy away from the hard problems. Not only relishing the challenges, he never tires of the satisfying emotions he feels when Cacace, Tusch & Santagata obtain good results for their clients.
777 Summer Street Stamford, CT 06901 P: 203.327.2000 www.lawcts.com
ADVISORS MAGAZINE p.77
Bringing Personal Legal Help to
Small Business Peace of Mind about Legal Issues
ohn Comstock of The Comstock Law Firm, PLLC (Comstock Law) knows a thing or two about running a business. From working as a professional musician and real estate agent during college, to starting his own construction company before moving into law, Comstock understands the unique needs and perspectives of business owners firsthand. Founded in 2004, Comstock Law is comprised of both Comstock and his father, attorney Brian Comstock. Comstock himself earned a J.D. With honors from Seattle University School of Law in 2000, becoming in-house legal counsel and then CEO, of Chrono-Logic Systems, Inc. shortly thereafter. When that company moved to San Francisco, Comstock stayed in Washington state and founded Comstock Law, which proved to be another fruitful endeavor. “Most of our business comes from word of mouth,” said Comstock. He also persuaded his father, with a long and distinguished legal career and a large client base, to combine forces in Comstock Law. “We cater to small business – local small business mostly.” Small businesses have a wide variety of needs, and Comstock focuses on providing a full range of services especially for them. The law firm brings expertise in a wide variety of
by travis taylor
areas, such as business formation, termination, acquisition and sale, as well as handling contract issues, franchising, employment issues and intellectual property, among others. Getting to know his clients and enjoying their company are just as important to Comstock. Events such as litigation, arbitration and mediation can be stressful for small business owners – who sometimes are reluctant to seek professional legal representation at all. Comstock makes a point of becoming acquainted with his clients personally, which helps the entire experience become a less stressful and more positive one. Our goal is always to try to avoid court. But Comstock adds, “Sometimes you’ve got to go to court.” With another successful business venture tucked under his arm, Comstock notes that he personally views his family as his greatest success. As with any job, there needs to be a balance between family and work, and Comstock has found it. The Comstock Law Firm, PLLC 9 Lake Bellevue Drive, Suite 105 Bellevue, WA 98005 www.comstocklaw.com
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How Bill Gates’ Failed 1990s Art Project is Seeding New Startups in 2014. Serial Entrepreneur Sheldon Laube Launches Artkick