calls shots the David Reyes (The case for LTCI: State-by-state cost of nursing home care) Life insurance How to give the old standby new appeal

Transcription

1 (The case for LTCI: State-by-state cost of nursing home care) Electronically reprinted from March 2005 Vol. 4 No. 3 A Wiesner Publication Life insurance How to give the old standby new appeal calls shots David Reyes the This San Diego-based advisor considers himself a quarterback. Inside, Reyes shares the playbook that anchors his high-net-worth client business. Be better than the rest Strategies for going above and beyond The annuity debate Social Security, annuities take to the podium

2 management Advising advisors

3 LIFESTYLE MANAGEMENT David Reyes on managing a team of financial advisors and their egos to better address the needs of the high-net-worth market BMA: You describe yourself as the quarterback of a team of financial professionals. Do you actively market yourself that way? DR: Our firm is extremely unique. We consider ourselves advisors to advisors, because my clients are CPAs, attorneys, and high-net-worth business owners and families. There is a large, gaping hole in our industry. Most high-networth clients are not getting serviced properly because the gatekeepers don t have a vested interest in seeing the planning move forward. So I facilitate the planning; I m the quarterback. I work with the CPA, the attorney and the client through a multidisciplinary, collaborative approach to make sure that no rock is left unturned and we are doing everything we can to be client centric. It has to be about the client. BMA: So you facilitate communication between the interested parties. the clash of egos must get out of hand. DR: It can get crazy. But, quite honestly, that s what I get paid to do. It s a huge value for the client. BMA: How do you do it? DR: I ve been in finance almost 20 years. It s hard to teach. It s really more of an art form, although one of my mentors is teaching it. He founded the Institute of Michigan State. I graduated last October. It s a post-doctorate course on wealth planning for professionals with clients with $20 million and above. It mostly consists of CPAs and attorneys. I was one of only two financial advisors to attend. Part of the platform was how to handle this type of interaction. The first year was based upon the psychology of the client and the advisor. We spent days talking about perception how I see the attorney and CPA and how the attorney and CPA see me. BMA: So more than anything else, the program was about dealing with people? DR: It really was. There were technical issues we dealt with later in the program and we did a lot of case studies. I can learn spreadsheets and fancy PowerPoint all day long, but that does not motivate my clients to act. It s the relationship. It s credibility. I m oldschool pad and paper. I ll tell you, 90 percent of my clients cases are committed to on scratch paper. That s how things like this get done. People who have the wealth in this country are not the Bill Gates of the world. They are people who worked hard for 20 or 30 years in the business; they were successful in what they do and have a very narrow focus on their expertise. BMA: Who s your typical client? DR: Someone who is worth $10 million dollars or has a $500,000 tax problem. His largest asset is in real estate; that s the client I m going to engage. But if you cannot interact in a credible fashion with the other professionals, the other advisors, then you re out. All the technical pieces you have are moot. If you don t have the skill set to be able to facilitate a high-net-worth transaction, none of it matters. BMA: What sets you apart? DR: My extensive real estate background. I can tell you it s the area of my expertise that s helped me the most. Clients who have substantial assets do not want to talk to you about annuities or stocks. Real estate is the largest asset held. But more than that, selling is a four-letter word. Investment is a four-letter word. If you lead with that, you re finished. I get large assets Profile Firm Reyes Financial Architecture, Inc. Registered Investment Advisory Firm Firm Focus Strategic Tax Planning Advanced Pension Design & Planning, Advanced Roth Conversion Strategies Asset Protection & Preservation Estate & Retirement Planning Position Founder & Chief Financial Architect years in business 20 Client Net Worth $5-100 Million Reyes Financial Architecture, Inc. The Northern Trust Building 4370 La Jolla Village Drive Suite 400 San Diego, California Info@ReyesPlan.com

4 Lifestyle Management Real estate may be the No. 1 asset that most clients hold, but what kind of expertise do most financial advisors have in real estate? because I lead with problem solving. People don t make their money from stocks or from buying lottery tickets. Ninety percent of the wealth in our country is through business owners and real estate. If you re not in that marketplace, then you re not going to be a high-level advisor. I worked for a mortgage company for many years. I ve always been in the real estate side of things. Real estate may be the No. 1 asset that most clients hold, but what kind of expertise do most financial advisors have in real estate? The answer is zero. BMA: What do you look for in the professionals you work with? DR: Advisors are typically so concerned with the deal that they forget about the big picture. The main focus has to be, How do we solve problems for the client? Period, end of story. We have three criteria at our firm. First, I must truly like the person. It doesn t matter what the value is. Second, we all have to add tremendous value back to that client. Third, it has to make economic sense. This is the foundation of what I do. It frees me to work with the people I want to work

5 Most advisors are horrible. About 5 percent are good. Out of those, there are some who are really excellent. But they are few and far between. with. I work 12 to 14 hours a day and I don t care. I get tired. But the fact is I have the best job in the world. Who else gets to help save their client? I solve their problems. BMA: And if you need somebody to handle that technical stuff? DR: Then I have the attorney, the CPA and the other members of the team handle it. I have the best because I ve gone through and cherry-picked them all. It s a variation of the 80/20 rule, which I call the 95/5 rule. Most advisors are horrible. About 5 percent are good. Out of those, there are some who are really excellent, but they are few and far between. You really have to do a lot of due diligence with advisors, attorneys and financial advisors to ensure their background is solid. BMA: You refer to the coming baby boomer retirement wave as the largest wealth transfer in history. DR: It will be, and it s a problem, but a good problem. When you re dealing with the transfer of wealth, the biggest

6 Lifestyle I do a lot of strategic tax planning. Since I moved into that level of expertise, my practice has gone crazy. We re up fourfold in revenue in the last 12 months. issue is taxation. My whole practice is focused on taxes. I do a lot of strategic tax planning. Since I moved into that level of expertise, my practice has gone crazy. We re up four-fold in revenue in the last 12 months. It s a much tougher road to hoe because you have to have tremendous credibility and you have to hold yourself out that way. The first question I always get is, Are you an attorney or a CPA? I say no and then tell them about how I work with the CPAs and the attorneys to help them. My value proposition is that I m adding value back to the CPA and the attorney. How do I make the CPA look good? How do I make the attorney look good? They re my referral source. But ultimately, you have to add value back to the client. And the moment you start thinking about what you re going to get out of it, you re done. I ve become a business partner to my clients in every sense of the word. When you can position yourself that way, it s a pretty powerful place to be. BMA: How did you maintain credibility in the most recent market downturn? DR: I was pretty fortunate. Our clients didn t suffer anything too dramatic. Because the nature of my practice is more holistic, it s not about investments. Investing is one of maybe a dozen services I offer the client in addition to tax planning, retirement planning, business succession planning, estate planning. BMA: Are you at all concerned about the real estate market? DR: Definitely, but real estate is a very localized economy. Real estate in San Diego vs. real estate in Sacramento is a different question. When people make these generic statements, they re not very accurate. The affordability index is a combination of interest rates, sales prices and income. Right now in San Diego it s 8 percent; meaning 8 percent of the population can afford to buy a home. In Ohio, it s 80-something percent. The average is about 20 to 25 percent. Macroeconomics will tell you that we re in trouble. Wages can t keep up with home prices. Interest rates are rising. Our biggest challenge is the deficit. But let s say your client s real estate holdings are 30 percent of his assets. Do you think, as an advisor, it would behoove you to have expertise in real estate? BMA: How do you gain client trust in the initial meeting? How do you illustrate the value proposition to them? DR: It s about third-party credibility. This is an important point, and I can t emphasize it enough. Thirdparty credibility is the single biggest form and driver of my relationships. There s nothing else that supersedes it. What I mean by that is all of my clients come from CPAs, attorneys, high-net-worth clients and referrals. Ten percent of the clients are what I call cold clients. Ninety percent of my clients are coming from a referral source that has his own credibility, and that credibility is going to transfer from him to me. I ve also written a couple of books and spoken nationally on various strategic planning topics with estate planning firms. I ve established myself as the expert. Being an author is a large credibility source. You always have to think about how you can leverage credibility. It s an approach that keeps me focused on the right areas. Posted with permission from the March 2005 issue of Boomer Marketing Advisor Copyright 2010 Summit Business Media. All rights reserved. For more information on the use of this content, contact Wright s Media at