December 18, 2014

SECTOR PORTRAIT

Wealth Management

Amid global uncertainties and a slow, frustrating recovery, many are grappling with how to keep their money safe and make it grow at the same time. In this sector portrait, some of Florida’s leading financial advisers offer advice and perspective.

Alvaro Martinez-Fonts
CEO, J.P. Morgan Private Bank Florida, Miami

Alvaro Martinez-Fonts
Best money advice ever received: When I was a commodities trader in Manhattan in the early 1980s, the head trader talked to me about when to sell. He said, 'If something you bought went up half, lock in the profit by selling half of the position, and let the rest run. If it goes down, you've sold 50% and you've locked in some profit. If it goes up, you still have 50% of the position to take advantage of the rise.' If you look at the way I have traded my own account, that's the way I do it. Violent movements of buy everything and sell everything long term are not the best solution. It's better to average in and out of investments.

Best money advice he's ever given: One thing I have advised clients over the years that turned out to be sound advice is don't bet against the United States. At specific times, like when the Tequila crisis in 1994 began to spread to the United States, clients said it's time to sell. I believed it was an opportunity to buy, not to sell. It happened again with 9/11. If you sold after 9/11, you would have lost money. J.P. Morgan used to say, 'Always be bullish on your own country.' I have reminded clients of that, and it's the best advice I've given over the years.

Advice to clients now: Look to diversify globally into emerging markets. A lot of what America has taken advantage of — innovation, mobile labor, less regulations — are now occurring in non-U.S. markets. The United States is moving toward more regulation while emerging markets are moving toward a free market system. Keep your eye on the United States but look very carefully and deeply at Southeast Asia, Brazil, India and China.

How he'd invest $50,000: If I had any debt, I would pay it off. I would invest in emerging markets. I would invest in private equity funds. That's hard to do with $50,000, but if I could find something in private equity that's an emerging markets opportunities fund, that's what I would do with it.

Q&A — Paul Auslander


[Photo: Brook Pifer]
Paul Auslander, chairman and CEO of American Financial Advisors in Orlando, will take the helm of the country's largest organization of financial planners, the Financial Planning Association, next year. Auslander is a registered representative with Foothills Securities and serves on Florida's Financial Literacy Council, which works to provide a single state resource to the public on financial literacy. The council also studies financial problems that affect consumers. Auslander talked with Florida Trend about wealth management and financial planning.

What's the biggest misperception about your profession?

So many people think the value of a financial adviser is in picking stocks. Their true value is in understanding clients, maintaining relationships, understanding their risk tolerance and educating them.

What's your focus for the profession on a national level?

On the regulation side, the fundamental issue is there is no single law that governs providers of financial planning services. I've never met a sales professional who doesn't have some title that suggests they are an adviser or planner or something other than a salesperson. As a certified financial planner or registered investment adviser, you are held accountable (under the Investment Advisers Act of 1940). That makes us fiduciaries, and we have to put your interests first and expose any conflicts of interest. You can sue me if I don't do that. The same standard does not apply to life insurance agents. We (the Financial Planning Association) sued the SEC over this issue. Now we're asking for more regulation. It's the only way to safeguard our consumers.

What was it like to be a financial planner during the financial meltdown?

I didn't panic. Our job is to keep clients from shooting themselves in the collective feet. I worked with my clients to reassess their asset allocation. I told them, 'Forget what you see in the papers' and asked, 'How much do you feel comfortable losing?' and then said, 'Let's work from that standpoint.' If you have a relationship with your client, he will come out of the difficult economic climate in fine shape. It's easy money when everything is going well. When it isn't, you've got to have tough conversations, and our industry is new at this.

Are more people jumping into your profession or out of it?

In the early 2000s, when you read about the professions to go into, No. 1 was some form of financial planning. People felt Baby Boomers and their children would need financial advice to handle the wealth transfer. Nothing weeds out the weak faster than a market crash. For a while, we saw CPA firms moving into financial planning, which was really code for selling investments. At the beginning, it was the greatest thing. Now, no one wants to go near it. For me, teaching financial literacy is a passion. It's why I chaired Florida's Financial Literacy Council. I think a lot of what happened in the last three or four years, the financial meltdown, was made worse by a lack of financial literacy. Good people get into the profession to teach their clients. We could have avoided some of the fallout if people were smarter about their money.

Where is your profession headed?

I think you will see the same thing happen in financial planning as it did in accounting. You will get a degree and then spend a fifth year to become certified or get your CFP and then go to work for someone like me or a large firm involved in this. One of the biggest problems is the consumer doesn't have confidence in financial advisers, mostly because of Bernie Madoff and other unscrupulous people. At the same time, some people are turned off because their financial manager didn't accurately call the meltdown. They think an adviser is supposed to be clairvoyant. Our profession has a black eye, but we will go forward. The key thing now is to make sure clients are properly diversified with the right asset allocation. You must know your client cold ... know exactly what his tolerance is and what his objectives are.

208,400 Number of personal financial advisers in the U.S. in 2008 (the latest figures available), up from 94,000 in 2000 and projected to rise to 271,200 by 2018

19,450 Number of financial planners in Florida in 2008, projected to rise to 24,100 by 2018

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