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  • Money Matters: Wealth Management Industry Overview

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    The key to creating, keeping and growing wealth is knowledge. When it comes to managing money, education is essential, and while the internet can be helpful, having a personal financial “professor” can prove profitable. Most in the wealth management industry consider educating their clients their core function. “For my clients, I always make sure they know and understand what we are doing, why we are doing it and how it will work for their long-term plan,” said Mitchell Dubina, Vice President, Investments at Stifel.

    He’s not alone in this approach. Amanda Overby, Financial Advisor with Raymond James, is committed to increasing her clients’ financial literacy level and pointed to the size and scope of the River Region’s wealth management industry as a major asset for residents. “With plentiful resources, everyone who wants to get help has access,” she said. “Our area wealth management professionals are a great resource for learning about various financial topics.”

    More financial advisors to pick from means more opportunities to find the right fit, and according to Dubina, this variety in choice is key. “For the citizens of the River Region, having many wealth management firms provides a myriad of options when it comes to personalized financial planning,” he said.

    Choosing to work with a financial advisor is motivated by more than hopes of greater returns; the advisor client relationship and the informed guidance it offers can also provide peace, an aspect that increases in value in a volatile economic climate. During COVID-19, area advisors have depended on these bonds of trust plus previously made financial plans to combat clients’ fears. “The challenges associated with COVID-19 have given financial advisors the opportunity to serve our clients by reassuring them of the financial plan we have in place and reducing the anxiety that comes with uncertainty,” Overby said.

    Bad news and the unpredictability it can cause are givens in today’s world, but the pandemic really shook financial markets and in turn, many investors’ resolve. “Negative events are not unusual,” Barry Prim, Senior Client Consultant at Warren Averett Asset Management, said. “They happen fairly regularly. What was unusual this time was the scope of the event, and the government’s response to it. Right or wrong, shutting down the economy for any reason will create disruption and economic pain.”

    Prim says the “revaluation of risk” this brought on for clients is not necessarily a problem, and actually something he recommends doing every year, no matter the circumstances. Shaw Pritchett, Principal at Jackson Thornton Asset Management, agreed and stressed that emotions are the enemy when it comes to successful wealth management strategies, calling the virus the “challenge of the moment,” but only one of many. “The news related to COVID-19 is scary and has created anxiety in the minds of investors across the world. When we talk to clients, we remind them that when we opened their account, we agreed on an investment strategy that was appropriate for them at a time when they were not emotional,” he said. “There was reason for concern before COVID-19, and there will be a reason for concern after COVID-19. Acting out of emotion is never a good investment policy, so we continually remind clients that this uncertainty shall pass like all the others before.”

    While this wisdom can help calm clients, the real cure for client jitters is a well-researched, personalized financial plan, as Dubina explained. “My mission is to remind each client what their objectives for their wealth have been, are presently and plan to be in the future,” he said. “Unless these plans have changed, we remain focused on their plans for the future and stay the course.” Pritchett echoed Dubina. “The best plan is to stay the course, as no one has consistently proven that they can time the market. More fortunes have been lost than made trying to prove that statement wrong.”

    Today’s turbulent times only underscore the purpose and importance of these plans. Pritchett likened wealth management planning to preparing for a trip. “If you were to go on a vacation, would you get in the car and drive until you found the perfect place? Most likely, you would put in some effort to plan ahead and design a trip that met your needs and wants, and you would create a roadmap to show you how you would get there,” he said. “The same applies to wealth management. To have a successful experience, you need to plan ahead to make sure you create the roadmap required to meet your financial needs.”

    Wild market swings and resulting questions also highlight the role a financial advisor plays in crafting and executing a solid plan, which, thanks to multiple considerations, can be a complex undertaking. Prim outlined the long list of considerations that form the foundation of any plan. “You want to be consistent to who you are and think long term if you can. Of course, long term means something different based on each investor’s age, risk tolerance and unique situation, but market volatility like we have experienced this year can cause many to shun investing in the equity markets.

    Or worse, to try and time the swings by coming in and out of the stock market,” he said. “Both ideas are usually incorrect and can negatively affect returns. A better path is to make a plan for where you want to be in a certain time, discover your risk tolerance, then implement a unique, diversified portfolio to get there. In the long run, statistics have proven that the consistent investor will have better results with a diversified approach that includes equity exposure.”

    Prim understands the long run as well as anyone. He’s been in the wealth management industry since 1990. During the last three decades, he’s seen multiple changes. “From the evolution of exchange traded funds and online trading platforms to the recent introduction of crypto currency, access to the markets has changed drastically over the years,” he said. “Investors can now buy and sell securities on their phone in an instant, which is a far cry from how it was done in 1990.” Still, according to Prim, there’s a constant. “What has not changed is the need for most investors to get help. It can be very overwhelming to make sense of this rapidly changing market,” he said.

    Overby has seen the recent economic uncertainty shake the confidence of DIY investors and bring people to or back to financial advisors as they seek answers and understanding. “When volatility strikes and economic uncertainty appears, investors become concerned and turn back to financial professionals for help,” she said.

    Another facet of the wealth management industry always in flux is the regulatory environment. Financial advisors are some of the most heavily regulated professionals in our workforce and are subject to a high level of scrutiny. It’s all for the benefit of the clients, and most recent additional regulations have been aimed at bumping up transparency in an attempt to protect clients.

    Pritchett claims these rules have good intentions but are sometimes less effective in their implementation. “The industry as a whole wants to advocate for having advisors act in the client’s best interest. The problem is that stakeholders in the industry all have differing opinions as to what that looks like,” he said. “Several pieces of legislation have been introduced and debated over the last few years with the end result being watered-down regulations that don’t accomplish much. There is currently no end to this debate, and it will be something that the industry will continue to monitor.”

    The sheer volume of regulations can be cumbersome not just for those in the industry, but for those they serve too, according to Dubina. “Regulations have increased and have had both positive and negative effects on my role as a wealth advisor and for our clients,” he said. “Some of these regulations can at times be burdensome for them due to an influx of mailings.”

    The effort River Region wealth management professionals put into aiding their clients is matched by a commitment to community. “Members of the wealth management industry are good community stewards,” Pritchett said. “Advisors in our firm and our colleagues at other companies are heavily involved in charitable causes and community service projects in the area.”

    Prim shared similar thoughts. “Montgomery has been blessed to have a large, diverse set of wealth management offerings for decades. This has created many job opportunities and impacted many lives,” he said. “Go to any charitable event and take a look at the donor list. It will be filled with numerous wealth management firms and individuals.”

    Members of the wealth management industry may be doing their part to improve the quality of life here, but the industry itself is facing its own challenges. A major hurdle is the shrinking size of available financial advisors. “Our industry always needs talent, and now it is even more in demand,” Prim said. “With technology advancing the delivery of our services, we are in need of young people who want to help clients reach their goals.”

    Dubina agreed, calling the smaller number of young people currently entering the field in the next 10 years, one of his industry’s “biggest challenges.” “The role of a wealth advisor is, and always will be, important for folks in all walks of life,” he said. “Due to the lack of new, young professionals, I do worry about the financial literacy of the next generation without access to wealth advisors from their generation.”


    Tough Times What about 2020?
    We asked our industry experts their thoughts on how COVID-19-induced economic issues are affecting 401(k) retirement plans.

    Q: How are 401(k) plans faring? Are some businesses not matching or not matching as much to cut costs and is this wise?
    Amanda Overby: Companies are doing what they have to do to keep the doors open. In some cases that means suspending or reducing a 401(k) match for now. The retirement plans were developed with times like this in mind to allow for flexibility.
    Adam Causey: Our 401(k) clients have been faring well. It’s too early to tell how the economic conditions will impact plans in the long term, but our clients are making their contributions as scheduled. We may know more in the spring of 2021, when companies need to decide whether or not to fund discretionary contributions, but we don’t have any indication that those will be eliminated or scaled back.
    Barry Prim: Surprisingly well. I believe that over the past two decades it has become ingrained in participants minds that consistent saving will produce better long term results. This is a great development. It is true that in tough times many businesses have to scale back on their matches or profit sharing contributions, but in my experience most do so as a last resort because they understand the value of the benefit to the employee.

    Mitchell Dubina: 401(k) plans that I oversee have fared well so far in 2020. All the plans have continued to match and participant deferrals have remained constant, unlike the Great Recession of 2008-2009.

    “One trend that we see is a continued movement towards a passive investment approach. Even though the active approach is still more prevalent, industry statistics show that investors are moving away from an approach that involves market timing and stock selection toward a management style that captures market returns, lowers costs and avoids efforts to seek out the next hot stock.” - Adam Causey, Principal, Jackson Thornton Asset Management

    “If you were to go on a vacation, would you get in the car and drive until you found the perfect place? Most likely, you would put in some effort to plan ahead and design a trip that met your needs and wants, and you would create a roadmap to show you how you would get there. The same applies to wealth management. To have a successful experience, you need to plan ahead to make sure you create the roadmap required to meet your financial needs.” - Shaw Pritchett, Principal at Jackson Thornton Asset

    WEALTH MANAGEMENT: What’s in a Name?

    Wealth management is generally defined as a comprehensive approach to managing a client’s entire asset picture and often includes customized investment strategies, estate planning, tax services and more. While many view wealth management as a service only offered to or needed by the ultra-affluent, our sources say, “not true.” You don’t you have to be “wealthy” to benefit from working with a financial advisor to create and enact a financial plan.

    “Wealth management is simply maximizing whatever resources you have in a more efficient and productive way in order to meet certain goals. Most people don’t consider themselves to be wealthy, but almost all have long-term goals and dreams. Our job as advisors is to help them plan and reach those goals – and that includes those at the beginning of the process and those nearing the finish line!” - Barry Prim, Senior Client Consultant at Warren Averett Asset Management

    “The term ‘wealth management’ is a bit of a misnomer. You do not have to be wealthy or have wealth to start a plan. The key is to start somewhere—even if it’s from scratch! Once you decide to begin saving and investing, as long as you stick to a plan and remain diligent, it does not take long to begin to see the fruits of your labor and sacrifice. In my 15 years as a Wealth Advisor, nothing has been more rewarding for me than to see clients start out with little or no wealth, and now be on their way to financial independence. All because they took the initiative and partnered with me to formulate the plan to get them there.” - Mitchell Dubina, Vice President, Investments at Stifel

    FIND A PRO that works for your needs

    Q: What is the most important thing to consider and/or look for when choosing a wealth management professional/financial advisor?
    “The single most important factor in selecting a financial advisor is a relationship bound in trust. Integrity is the bedrock of any professional relationship, and that is especially true in the financial advice business. You should be able to sleep at night knowing that regardless of how the market performs in a given day, that your advisor is committed to putting your interests ahead of their own, and that they’ve taken the time to truly understand your unique needs. It’s also important that your advisor can articulate—in plain language—an investment strategy that is both disciplined and thoughtfully tailored to your specific needs and goals. Lastly, there is an immense value in finding an advisor you like and respect as a person.” - Richard B. Austin, CRPS®, AIF®, Branch Manager and First Vice President, Investments, Raymond James
    ”Consider working with a financial advisor who takes a holistic approach to providing financial services. Rooted in financial planning, this approach entails listening to your needs, goals and dreams and charting a path towards them. Holistic advice takes the focus off of transactions and turns it towards the outcomes that are important to you.” - Brianne Smith, Ph.D., PFS Independent Financial Advisor, RFG Advisory

    Q: What is the most important thing to consider and/or look for when choosing a wealth management professional/financial advisor?
    “Wealth management is about more than products; it’s about planning, strategy and financial coaching. When searching for a wealth management professional, you want to find someone who is experienced and ready to walk with you through a complete financial picture. Someone who works to build a connection and is truly there to guide and serve on your way to meeting financial goals.” - Libby Bryan, Private Banker Guardian Wealth Management
    “There are many aspects to consider when choosing to work with a financial advisor (experience, licenses, etc.). One of the more important things to consider is how comfortable do you feel working with a particular advisor? Since this will be someone who will advise and manage assets for you, it is important to feel comfortable working with and communicating with a person that understands you and will partner with you in reaching your goals.” - Ken Peavy, Vice President of Wealth Management, MAX Credit Union

    3 KEYS:

    “When looking for any type of financial partner, we believe there are three important points to consider.
    1. First, are they experienced with the proper credentials for the type of business you would like to engage in?
    2. Second, are they a fiduciary? (Meaning they put your interests above their own and have a binding legal obligation to do so.)
    3. And third, are they the kind of person you would spend time with outside of business? If all criteria are met, you should have a really positive outcome and long-lasting partnership”
    - Mark Snead, Market President, Synovus

    “I believe three things are important when choosing a wealth management team: Trust, skill and fees.
    1. You must trust the people you select to help manage your financial affairs. You must also trust that you can bring them any issue, financial or not, and that they will have your best interests at heart.
    2. The team you select must be able to deliver results and to do so, they must have a wide range of skills related to investments, planning, taxes, etc.
    3. Fees must be part of the discussion, and they should be transparent and competitive. There are not many things you can control when it comes to planning, but fees are one of them.”
    - Matthew Murphy, Senior Vice President, Wealth Management, Longleaf Wealth Management UBS Financial Services, Inc.
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