Springfield Business Journal_2020-09-28

From unprecedented to pivotal; from robust to caution; no one is taking anything for granted in this economy. IT’S AMAZING HOW RESILIENT THE MARKET, EMPLOYEES, AND CLIENTS HAVE BEEN . ” Marlene Chism Consulting/Coaching/Speaking CEO Roundtable Host We help C-Suite leaders build drama-free cultures that drive growth and reduce costly mistakes. www.marlenechism.com 417-234-2202 SPRINGFIELD BUSINESS JOURNAL · 13 SEPT. 28-OCT. 4, 2020 over a 14-year period, about 6,500 predictions. They were about 48% suc- cessful, worse than a coin flip. You don’t need to predict the market for it to grow your money. The overall stock markets work great for the long term. It’s up about 85% of the time. It’s not like Las Vegas where the house wins most of the time. And we can plan for the other 25% of the time when markets are down. If you notice that everyone’s buying up toilet paper and you think, “Oh, maybe I should invest in Charmin,” well by the time you get to the phone, all the other thousands of investors in the world have the same idea and they’ve already driven the price up. You’re never going to be beat the market that way. The good news is you don’t have to; it simplifies your approach to have a plan, so you don’t have to worry about what the markets do or what Congress does – and then you adjust as needed. Election season Temple: 2020 is a very divisive election year. What do you know about election years and how that predicts behaviors? How does that affect investment port- folios? Gott: We looked into the effect of presi- dential election years on investing performance because it’s such a com- mon question. Like most other types of predictors, they really don’t work. It be- comes background noise to the broader markets. What the stock markets like is predictability. The less the government does, the more the markets like it. Dougherty: It’s speculative at best to try and predict what the outcome of the election’s going to be and all of the policy implications that either party could impose. What we do know is how well the economy is doing is a significant influence on the election. I’m sure we’re all getting that question: “Who’s going to win it and what’s that going to do to my portfolio? What’s that going to do to the economy?” We would be remiss to even give a definitive answer in that arena. Homan: For us, having part of our busi- ness on the trust administrative side and estate tax planning, one of the main issues that we are talking to our high net-worth clients about is the state tax exemption and what might happen there depending on a new party coming in. I have clients that are right now get- ting things in place so that they can pull the trigger toward the end of the year if another outcome comes along. Dougherty: Typically now about 45 days before the actual election, we start to see a lot of volatility. What we’re telling them is we’ll get through this, no matter what the outcome. Our focus for the economy needs to be figuring out a vac- cine … and moving past all of this. We’ll do it. Gott: People assign way too much credit and blame to elected officials for the performance of the stock market, the economy, gas prices, inflation, you name it. Any news cycle event, including an election, can have a temporary effect on stock prices, up or down, but in the end, it’s the fundamentals of those individual companies in the stock market that re- ally drive the train. Thurman: We encourage our people and our clients to turn off the media. Right now, whether it be CNN or Fox, they’ve got talk- ing heads that are really literally just talking heads. Very few of them are practitioners like the people on this call, and very few of them are actually focused on clients’ planning. They are focused on selling a book or selling their time. We en- courage our people to stop listening to the media; start focusing on your plan. Homan: Now, more than ever, if it sounds too good to be true, it is. Fiduciary rule Temple: Can you shed some light on regu- lation regarding the fiduciary rule? This summer, primarily Democratic mem- bers of Congress, penned a letter to the Department of Labor regarding financial advisers and their fiduciary duties, ask- ing that they reinstate this five-part test. What’s your take on it? Dougherty: I can’t believe it’s rearing its ugly head again. It remains to be seen what’s going to come out of Washington. We work really hard to do what’s in our clients’ best interest. We work with our clients through financial planning to make sure that their goals line up with where they’re heading. There’s still a lot that remains to be seen, evidently, since it has reared up again. Gott: (It’s) focused on clients moving their savings from a workplace savings plan, like a 401(k), over to an individually owned IRA. Advisers are financially mo- tivated to transfer a 401(k) to an IRA un- der their management. So the new rule, called Regulation Best Interest, is sup- posed to define the circumstances under which an adviser can be held to the legal standard of acting in the client’s best interest regardless of how it may benefit the adviser. Some in Congress feel there are too many loopholes. If an adviser really puts themselves in the frame of mind of acting as a consultant, instead of a salesperson, then clients will know what they’re getting, why it’s better than the other alternatives, including leaving it where it’s at, and what it’s going to cost them. If you also include how the adviser gets paid on that, then a client’s going to be an informed consumer. That’s really the goal of the rule. It’s good for the clients, and it’s good for the reputation of our industry. Regula- tors are going to have to provide ongoing guidance, including examples of gray areas and close-call violations, until the industry can get their hands around it. There’s a lot of confusion around this. It’s kind of a strange hybrid between the fiduciary rule for securities licensed advisers and the suitability rule for insurance profes- sionals. It’s neither and it’s both. The language is really convoluted and hard for brokerage compliance departments to interpret, let alone consumers. Thurman: When we do more by giving them individual advice, now they’re say- ing, “No, we want you to do something different.” Would you make up your mind what you want? Adviser workforce Temple: I want to get into just your busi- nesses. Tell me about the workforce pipeline. Do you have enough recruits, and where are they coming from? Thurman: No one really wants to share about this because it is tight. It’s tight in Indianapolis, Houston, San Antonio, where we have other offices, to find quality people that manage money, just like the three other people talking here. We’ll have to have 50 applicants to have a young Paula or a young Kenny or a Diane. We’ll have to interview a whole lot. Whether it be Springfield or any other market, it’s really tough to find quality advisers that really, really care about clients, and then they’re techni- cally astute on top of that. (Missouri State University) puts out some of the best people, and we recruit at (Indiana University), (University of Missouri), Purdue [University], UMKC, etc. Dougherty: I agree with you on Missouri State University – and all the local col- leges – that they just have a financial planning department that is second to none. It seems like a lot of the candidates that come out of there are ready to sit for the CFP. That’s a kudos to them. You can teach the technical part, you hope that people are interested in that piece of the business, but they’ve got to come with some ethics and they’ve got to come with some integrity. At this stage of the game by the time you’re ready to hire, you hope they already have that. It’s a tough mar- ket, but once you find those individuals, they’re golden. Gott: Our most recent addition has a com- mercial lending background but also taught personal finance in the Spring- field school system, and he’s very active in the community. Since a lot of what we do is client education, he’s a perfect fit. The securities licensing is not easy, but a person can study hard and get it if they’re interested. Then we can teach them our own approach to planning and investing, which is again, to act as consultants for our clients. If an adviser can relate to clients on a personal level, helping them understand complicated concepts, and they’re actually interested in our industry, they can learn all the basic nuts and bolts. Dougherty: I prefer attitude. You can teach the aptitude. When I started the business, they said you had to have the mind of an economist and the heart of a social worker. It’s true. Excerpts by Web Editor Geoff Pickle, gpickle@sbj.net . UP NEXT: Wellness Oct. 26 Supporting Sponsors: