You could almost call Curt Knotick a detective, an income detective. What’s he’s “solving” is an income mystery: How much money will his clients need to last throughout retirement?
It was that singular focus on “solving” for income — which happens to be his company’s investment mantra — among other factors, that led Senior Market Advisor to choose Knotick, founder and CEO of Accurate Solutions Group, LLC in Butler, Pa., as this year’s Advisor of the Year.
SMA caught up with Knotick to discuss the process he takes his clients through; the benefit of being dually licensed; why he’s booming with the boomers; and the family tragedy that ultimately led him to a career in financial services.
A four-step process
Knotick sums up his financial planning template in one phrase: “solve for income.” And it begins during the first stage of a four-step process with each prospect.
- The process kicks off with a vision meeting to ascertain what the prospect’s basic goals are in retirement and what could threaten or derail their golden years.
- Next is the assessment meeting, which, as the name implies, uncovers basic information about a prospect’s financial status: What are his assets? Does she have a pension? How much can they expect to draw from Social Security when they retire at age 62 or 66? Are there any potential hazards on the horizon? It’s also at that meeting that a prospective client is given a written snapshot of their current status.
- After the assessment meeting, the client must agree to move onto the strategy session, where, based on what was gathered during the previous two sit-downs, Knotick formally lays out his recommendations.
- At the assessment meeting, client and advisor mutually confirm their commitment to the ongoing process and set up the fourth and final step: the action meeting when the blueprint both client and advisor have approved is implemented.
Knotick stresses that at no time is a prospect pressured into making a decision. What’s more, he’s found that consumers like having a written plan placed before them. “It’s amazing, so many financial advisory firms today, you go in and you show them your stocks and they immediately tell you what you need to do. They don’t have a process,” he says. “Clients like seeing that we have a four-step process, that we provide a document of that four-step process in our first vision meeting. We make sure they are comfortable with that process before we go to that second meeting.”
See our exclusive video interview: Q&A with Curt Knotick
Bridging the income gap
At the crux of all those meetings and strategy sessions is a drill down to the client’s monthly expenditures, and whether their current and projected income can meet those expenses in retirement. If there is a gap between the two benchmarks, Knotick, ever the good detective, solves for that income disparity.
To bridge the gap, Knotick often utilizes guaranteed income products, like annuities.
“In my opinion, that income cannot be invested,” he declares. “That income has to be guaranteed, be secure. Typically, we utilize annuities whether it’s a structured income annuity system, where we ladder the accounts, or one particular account. We will solve for income, and carve out the assets necessary from their portfolio to provide that income.”
Once that foundation has been established — Knotick likens it to building the foundation of a house — then a client can assume a bit more risk in their investment portfolio.
“Clients really appreciate that,” he says. “We’re not saying annuities are right for 100 percent of your money or investments are right for 100 percent of your money. We are basically saying if you need income from assets for retirement, we are going to carve those out, separate those from your investments and we are going to guarantee those through annuities, through the income riders provided. Then we can begin to take a look at building the house from there. But we first have to build that foundation, and we build that by solving for income.”
A family tragedy
Knotick began to build his career in the financial services industry after a horrific family tragedy. In 1986, his older brother was murdered when he came to the aid of a woman being assaulted by her former boyfriend. The man pulled a knife, stabbing his brother, Eric, then 21, to death.
The loss and subsequent controversial trial devastated his family. However, since his parents had a small life insurance policy on his brother, they didn’t have to worry about where the money was coming from to pay for the funeral during that difficult time.
“It allowed us to focus on what was important, which was my brother, and not be concerned with finances to pay for final expenses,” Knotick recalls. It was also that terrible incident that made him realize the value of life insurance.
So a few years after that tragic event, Knotick decided to purchase a whole life insurance policy on his life. The friend who sold him that contract later recruited him as a captive agent for MetLife. With that, he entered the insurance profession in 1989 after a stint in the quality control department of American Eagle Outfitters in Pittsburgh.
Yet the longer he worked as a captive agent, the more he came to realize that one firm, no matter the breath and quality of their products, could not satisfy the financial needs of every individual. So in 1994, he went independent, founding Accurate Solutions Group in Butler, a town about 20 miles north of Pittsburgh.
Today, Knotick advises about 300 clients. Since he is the only advisor in the office (he has a support staff of three), he wants to maintain a manageable client base so he can preserve the deep relationships he has with his clients. He adds new clients on occasion, if it’s a referral from an existing client, but for now he intends to grow at a measured pace.
“Because I’m the sole practitioner we can’t bring 100 or 200 new relationships into the firm each year, or else I wouldn’t have that opportunity to spend that time with annual reviews, semi-annual reviews, client appreciation and client education events,” Knotick says. “We try to bring that value. I think that is what people are looking for today, they are looking for a trust- and relationship-based commitment from their advisors.”
Nevertheless, Knotick has a five- and 10-year growth plan sketched out. Again, those plans don’t envision bringing in more clients in huge numbers, but rather increasing assets under management (AUM) by 15 percent to 20 percent over the next five years. At the end of that time frame, Knotick intends to hire an associate advisor and an administrative staffer. Then, over the next 10 years, the blueprint is to remain on that upward path with the same strategy of harvesting more AUM.
“We want to retain our relationship basis, and for us to do that we do have to limit the number of people we bring on board,” Knotick explains. “While we’re doing that it seems we’re still maintaining that growth trajectory because the net worth of the individuals we’re working with seems to be increasing.”
Workin’ with the boomers
Though the client list may not ascend much in absolute numbers, the demographic of Knotick’s clientele is clearly evolving. The average age of his client has edged down from 65 to 58, or those, as Knotick describes them, in the “red zone of retirement.”
That shift is the outgrowth of two factors, he surmises. One, prospects referred to his firm are coming in at a younger age than in the past. Two, after the market nosedive of 2008-09 bludgeoned their portfolios, those core baby boomers swiftly grasped the notion that they had better start proactively planning for their retirement ASAP. “So we are definitely marketing for those individuals, going for an average age of 55 to 58 through age 65,” Knotick says. That has forced one change in how Knotick’s runs his practice: With many of those clients still employed, evening appointments are becoming commonplace now.
What those boomers want, in addition to the after-work meetings, is an advisor who can do it all, so to speak. They want not only income, tax and retirement planning but also investment expertise. For that reason, Knotick holds an insurance license as well as a Series 65 license. He’s an investment advisor representative of Global Financial Private Capital, an SEC registered investment advisor, utilizing Fidelity as his custodian. Currently, he is pursuing his CLU/CHFC designations and hopes to eventually become a CFP.
Topmost in the minds of boomers from 52 on up to 62 is income planning, or knowing exactly how much money they will have to live on in retirement. Accordingly, they want the security of knowing a portion of their assets will be set aside to provide a steady income stream in their golden years. But they also seek to have some inflation protection and liquidity, which can be attained through investments.
Since he is both insurance and securities licensed, Knotick can provide that dual expertise. Notwithstanding the current debate swirling within the halls of the SEC and the industry in general over the fiduciary standard, Knotick contends that consumers, especially baby boomers, now insist that a financial advisor have know-how in both the securities/investment realm as well as insurance. Whether regulations require it or not, potential clients will demand it, so advisors better keep up.
“They are looking for someone who has an unbiased opinion, and ultimately you can’t just be insurance licensed and you can’t just be investment licensed if you are going to provide unbiased advice based on a fiduciary standard,” Knotick states. “Some clients come into the office needing income and in that situation, we are going to look more toward insurance and insurance solutions. Other clients have all the fixed income they need and they simply need investment management advice.
“But most of the time what we have found overwhelmingly is that most people need advice in both areas. They want an advisor who will take a holistic approach, that isn’t going to just recommend investments because that’s who they are. And they don’t want someone who is just marketing annuity accounts for all of their assets. They want the recommendations they receive to be based upon their particular needs and desires and goals in retirement. And I think moving forward that is going to be serviced first and foremost by someone who can take that holistic approach,” Knotick explains.
That split he references is reflected in his production numbers. His firm is on track for $14 million in production this year, divided roughly equally between assets under management and annuities. “It’s not something we dictate,” Knotick says. “It’s really the client, their goals and concerns that dictate that. But it always seems to work out to about 50/50 between income planning and investment planning. “
Growth via referrals
When he first started as a captive agent, Knotick’s grew his book of business the old-fashioned way: lots and lots of painstaking cold-calling to family and friends. Then he graduated to taking over orphan accounts and in-force policies.
Those initial years were tough, he admits. Having gone independent, though, he’s found growth is much easier to achieve since he now has a more tools and products at his fingertips to fulfill specific needs. Today, any new clients he takes on typically come through referrals.
“It’s a wonderful feeling to have grown to that point where clients have put their faith and trust in us and are comfortable referring family and friends to us,” Knotick says.
Like most advisors, Knotick has established alliances with a CPA and an elder law and estate planning firm. And he keeps a regular schedule of client education events and client appreciation galas.
Twice monthly, he also conducts public workshops on topics ranging from “Essential Financial Strategies for the New Economy” to more recently, maximizing Social Security payments. He’s amazed by how little most consumers know about how and when to draw on Social Security. It’s basically a pension that workers have paid into, yet few thoroughly research the right time to start taking it. Those seminars tend to be well attended, he finds.
“It’s been a huge success,” Knotick says. “Nobody has ever talked about Social Security with them and how to elect Social Security. It’s such a big topic today. It’s so vital to know prior to making that election what the options are.”
Even if his firm’s growth now comes mostly from referrals, he still intends to sponsor those workshops. “I really enjoy getting out there and educating the consumer on the topics that are important to them today.”
And if some become clients, great. That’s when Knotick can start doing his detective work.
For more exclusive coverage on Knotick and our Advisor of the Year finalists, visit www.LifeHealthPro.com/AdvisorOfTheYear