Three's the charm, and so it is with Gary W. Cotter's practice located inside the sunny retirement community of Sun City Center. In a career in which the financial advisor has built his book from scratch three times, Cotter has found the perfect niche market: Florida retirees.
Gary W. Cotter, Principal, Cotter Financial; Sun City Center, Fla.; affiliated with LPL Financial Services; AUM: about $75 million
What he calls fallacies about annuities:"It's commonly said that annuities: (1.) should never be used for IRA accounts, and that (2.) they're not appropriate for people over 65. Those statements are absolutely and utterly wrong."
He's been in financial services for nearly three decades; but before that, the FA had a totally different profession -- college admissions director. "I liked helping people make a decision that would have a big effect on their lives. But then I decided I wanted to do it with grown-ups," says the independent, whose Cotter Financial is affiliated with LPL Financial Services.
Today, all the grown-ups he's advising are seniors. Often they are seniors' senior-age children.
In West Central Florida between Tampa and Sarasota, Sun City Center proudly has its own zip code, and it's legal there to travel by golf cart on public streets. Cotter, 59, discovered the community 17 years ago when he was working out how to rebuild his business not long after leaving a wirehouse managerial job.
Though Sun City Center's 25,000 residents 55 and over number far fewer high-net-worth individuals than, say, South Florida's Boca Raton, Cotter reasoned that its retirees "certainly need financial services and someone who'll provide them in an ethical, caring way."
One satisfied Cotter client indeed is Phyllis Black, 72. "This angel came into my life, and it was Gary Cotter," she says. Black was stuck in a family "nightmare" concerning her late husband's trust.
"He figured out a way for me to dissolve the trust so that it will make my stepdaughter happy. Gary is a genius," she says.
Arranging for the smooth transition of assets is complex, but that's where the persevering Cotter shines. "I like problem-solving. When I get into something that's really a challenge," he says, "it's hard to shake me loose."
Cotter's clients like the convenience of keeping all or most of their assets in one place and how the CFP coordinates, with teams he assembles, income, tax and estate planning.
For the past five years, he has championed deferred variable annuities as a way to preserve capital. "They offer guarantees -- and reasonably priced ones," he says.
According to Cotter, annuities are vastly misunderstood. Following the 2000-2002 bear market, insurance companies began widely offering living benefits -- certain minimum withdrawals -- which earlier existed only to a limited extent. A living benefit guarantees that "investors will always get back no less than they invested in the annuity and that the base can be stepped up as the account grows. This makes it a cross between a 401(k) plan and a pension," he says.
Previously, "the only real assurance annuities offered was that if the investor died, their heirs would get the money back. That was a big penalty to pay to exercise the guarantee! If you're investing for your own purposes rather than to leave heirs the money, it makes sense," Cotter says, "to have funds available while you're alive."
As for costs, he notes the reason the costs of those variable annuities are higher compared to other investments is that annuities "indemnify against the loss of principal." While some annuities come with penalties for removing money, others have none at all.
Cotter, bred in Lake Mahopac, N.Y., wasn't big on annuities until 2002, when clients who suffered losses in the down market came to him: "We need to make our money back, but we're afraid to do anything. What can we invest in?" That's when he dug in and began to research annuities.
Cotter, however, takes a total wealth management approach to financial planning. With new clients, income planning tops his agenda. He wants to assure couples that, for example, if a spouse dies, "nothing dramatically bad will happen to the survivor. If clients are in a second marriage and one spouse has a pension that won't continue after they die, they need to be certain," he says, "that the surviving spouse will be taken care of and not suffer a diminished lifestyle."
Cotter, who has a bachelor's degree from Texas A&M University at Corpus Christi and a master's in psychological counseling from the State University of New York at Albany, went from academia to financial services in 1978, when he joined IDS (later, American Express) as an advisor trainee in Tampa. Previously, he'd been with Bard College, in Upstate New York, and Carroll College, in Wisconsin.
Promoted at IDS to district manager, then to division manager in Corpus Christi, Cotter found, a year-and-a-half later, that he missed one-on-one interaction with clients. EF Hutton was opening its first office in Corpus Christi, and in 1983 Cotter moved to the firm, where he set about establishing a brand new book -- his second. Eighteen months later, he joined the independent practice of his financial advisor wife Shirley.
By 1990, a year after the Cotters returned to Tampa and Shirley had retired, Cotter began prospecting seminars at Sun City Center, about 30 miles away. Two years later, he'd acquired enough clients to even open a part-time office there, satellite to his base in Tampa.
Then, in 1997, Prudential Securities made Cotter a job offer he chose not to refuse: regional vice president for estate planning, consulting with 300 brokers in three states. He sold his practice and joined the firm.
But the post entailed heavy travel; and that didn't work well once Shirley was diagnosed with breast cancer and required surgery. (She is now cancer free.) So in 2000, Cotter left the firm to start his current practice in Sun City Center -- and once again begin developing a whole new roster of clients.
Earlier this year, when new client Phyllis Black contacted the FA, Cotter found himself in the tough role of family mediator. Her husband's trust was "unworkable," he says. "It's been a learning experience to figure out how to tear this thing apart and satisfy everyone. But we managed to get them to agree to divvy up the money."
To be sure, clients appreciate Cotter's people skills -- and that talent has served him well on the line of fire too. When the FA was rebuilding his book at EF Hutton, he cold-called exclusively -- and made dialing 100 numbers daily a success.
"People who never saw my face said, 'Yeah, I'll take one of those bonds.'
It was all done over the phone with no signature," he recalls. "And they always paid. I never got stiffed!"
Freelance writer Jane Wollman Rusoff is a Los Angeles-based contributing editor of Research and is the founder of Family Star Productions