From the May 2008 issue of Research Magazine • Subscribe!

Fearless Finance

Outliving their money -- it's retirees' darkest fear. How to help such clients feel more secure?

Francis Xavier Astorino says the answer often lies in structured products.

That's what the independent financial advisor discovered almost two years ago, when he began using structured notes to complement the variable annuities with living benefit riders he'd been recommending.

A financial planner for 25 years, Astorino, 49, is that rare FA who takes the time and trouble to create investment solutions that address clients' emotional issues about money -- which can frequently lead them to make giant financial mistakes.

"I've always cared deeply about the human condition. I believe that the emotional quotient drives financial decisions more than the intellectual quotient," says the FA, whose Astorino Financial Group, affiliated with LPL Financial, is in Fairfield, N.J. With a client base of mainly high-net-worth individual investors, the affable Astorino manages more than $100 million in assets. He is the sole producer on a team of seven, which includes wife Deborah, who oversees the insurance department.

For the past four years, Astorino has based his practice chiefly on a financial life-planning model, which thoroughly keys into clients' backgrounds, values and core beliefs. Though this means spending more time with existing clients, it is time well spent, Astorino says. Last year, he posted a 56 percent rise in gross revenue stemming predominantly from those clients.

"The good news," the FA says, "is that if you start to care more and more about your existing clients, the financial life-planning process is very fruitful."

Retiree Emily Schuman, 62, a client in Wayne, N.J., says: "We never made any money until we went with Frank. Our other advisors never met with us. It was as if we didn't even have a financial advisor. Frank is concerned about our welfare. It's like he dropped out of heaven."

But needing expert help to handle some clients' more serious emotional matters, Astorino brought in a psychologist to work with him. "He does more of the life coaching part, and I do the financial part," Astorino says. The two share referrals; for example, one client the Ph.D. referred is a widowed recovering alcoholic emerging from depression who needed to sell her home for financial security.

Helping folks "worry less about money" is a fundamental component of Astorino's client value proposition. That fits in well with structured products, the nation's fastest growing investment class.

"Clients like the concept of principal protection," says Astorino, most of whom pay him a 1 percent AUM fee. That rate stays the same when he shifts them from, say, mutual funds into SPs.

Deutsche Bank introduced Astorino to structured products. He became particularly interested in the earned note, which, he says, "basically guarantees principal but enables clients to be fully invested in an index or market. Growth depends on the specific note: If it's an S&P 500 note, for instance, then your opportunity is as good as the S&P does."

Astorino recommended structured notes to the Schumans around the time that husband Herbert, now 63, retired; Emily had already taken retirement. The way Emily understood the investment, "if the market went up, we'd go up and make money. But if the market fell," she says, "it would stay at a guaranteed place. We felt good because of the guarantee, that it couldn't go below a certain point."

Astorino, whose policy is to put no more than 10 percent of any client's investable assets into SPs, makes sure folks are fully aware of the downside. He tells them: "The guarantee is only as good as the underlying company. That is, if JPMorgan or Deutsche Bank were to go bankrupt, those guarantees wouldn't be as secure. It's the goodwill and underlying creditworthiness of the company."

He discusses the guarantees' limits too: "This is not a Treasury," he explains to clients. "This is a complex instrument. But it's less risky than being totally exposed to one market or one stock."

Born in Sweetwater, Texas, Astorino grew up in Essex Fells, N.J., the eldest son of eight kids. He funded his college education as a tennis pro, teaching at country clubs from age 14 and earning a B.A. from Boston College in 1983, having majored in political science and English; his triple minor was in philosophy, history and speech.

Undecided about entering law school or pursuing a career in advertising, he went on a weekend retreat, where he presented a talk about his spiritual journey. What he said prompted two financial advisor attendees to urge him to become a financial planner.

"I'd never heard of financial planning, but the concept intrigued me. I saw an opportunity to really help people," Astorino recalls.

He joined John Hancock for a short time, then wrote financial plans for a boutique firm, Financial Roadmaps, which later turned into Financial Network. In 1986, he became a registered investment advisor and went on his own in West Orange, N.J., working closely at first with a CPA and an attorney. The business has grown every year since.

Highly competitive by nature, Astorino, a champion golfer, even sang competitively for six years as part of a barbershop quartette, The Dapper Dans of Harmony -- the other Dans being his dad and brothers.

As for the advisor's harmonious use of structured products, Astorino says: "I see a growing demand for them in our practice. They help people when the market is changing. If we go into a recession or a bear market, they'll like knowing that they're not down, or down less, because of the care we took in investing their money."

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Freelance writer Jane Wollman Rusoff is a Los Angeles-based contributing editor of Research and is the founder of Family Star Productions.

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