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Financial Planning > College Planning

My Way

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Four years ago, Percy Bolton’s friends used to tell him that he was the most eligible bachelor in Los Angeles. With a master’s degree in economic history from UCLA, a physical condition that hadn’t forgotten he once played Division I college hoops, and a lucrative planning firm in a slick downtown office, he was well educated, fit, and financially secure. Factor in a warm heart–he was a longtime volunteer at kid-oriented non-profits like the Boys and Girls Club–and the combination, friends said, was hard to beat.

Today, however, Bolton is just about the least eligible man on the planet. Not only is he married, he’s also adopted four small children over the course of the past four years–partly because his charitably minded intentions have a tendency to get out of hand. “I have always been involved with charities dealing with children,” he says, “but when you’re on the board of directors, you don’t really connect with the kids on an individual basis.” These days, with four wriggling children battling over gummy bears at his breakfast table, that’s no longer a problem. “Now,” he concedes, “I am totally connected!”

Such extraordinary gestures are not atypical of Bolton, who acts upon his convictions with singular purpose in both his personal and professional lives. “Somebody once told me that living in the middle is for bureaucrats, because they play it safe,” says the Pasadena, Cali- fornia-based planner. “But to enjoy life to the fullest, you have to step out.”

And Bolton, 51, has been stepping out of the mold for a long time. As an undergrad, steamed at white classmates who would ask what sport he played before asking what his major was, Bolton relinquished his spot on the varsity basketball team to prove he’d earned his way to college on brains, not basketball. “Everyone assumed that if you were a black male and you went to UCLA, you must be on a sports scholarship,” he says. “After I quit, I was able to say, ‘No, I’m here on an academic scholarship. I get great grades, I don’t play sports, and I can’t dance, either’”–he laughs–”‘so can we talk about something else?’” As a graduate student he created his own major: economic history. And after graduation, while his peers flocked to blue-chip positions with substantial salaries, Bolton went to work in the low-profile field of financial planning for a modest paycheck wholly dependent on commissions. Friends thought he’d lost his mind. “This was the heyday of affirmative action, so if you had an MBA or a master’s in economics, you’d get a real good job in corporate America,” he says. “And here I was, going to sell stuff.”

Money was tight and pickings were slim in the early years. Most of his acquaintances saw little use for financial planning and saw even less when h

Percy E. Bolton Associates, Inc.

Percy Bolton

1127 East Green Street

Pasadena, California 91106

626-577-0667; 626-577-6068

[email protected]

Practice founded: 1980

Number of planners/staff in office: One planner, three support staff

Number of clients of the firm: Five financial planning clients on retainer, six financial planning clients on a project-only basis, and 56 investment-consulting-only clients

Compensation method(s): Fee-only

Average fee for a comprehensive financial plan: Varies from approximately $2,250 to $30,000; work is billed at the hourly rate plus direct costs

Fee for managing assets: Sliding scale from 1.5% for the first $500,000 to 0.25% for more than $5 million

(Rates for $10 million and above are negotiable)

Hourly rate: $250 plus direct costs, including staff members’ time

Client demographics: High-net-worth individuals, small businesses, non-profits

Education: BA in history and MA in economic history, both from UCLA

Professional designation: CFP

Outside interests: Spending time with family and friends; volunteer work, especially with agencies that benefit children

Quotable Quotes: “Minorities are younger, they are becoming more affluent, and the growth rate in the minority

community is going to be a lot higher . . . [Firms] have to begin to cater to the minority marketplace”

e started charging fees. But, 20 years later, Bolton’s crazy notion has more than paid off. Today he has more than 60 clients and is responsible for managing more than $190 million in client funds. He has served as the only African-American vice president the ICFP ever had, and for four consecutive years appeared on Worth magazine’s list of the best financial advisors in the nation. Twenty years later, Bolton’s determination and willingness to do things differently haven’t abated a bit.

The Road Less Traveled

But there are plenty of reasons Percy Bolton should never have made it this far in the first place. Born in Texas to parents with only third- and fourth-grade educations, Percy was the eldest in a family so large (11 children) that the school they attended gave them a discount on tuition. As a child, he witnessed the lynchings of two boys he knew, boys too young to know the consequences of whistling at a white woman in segregated Fort Worth. When a group of white boys threatened 11-year-old Percy with a similar fate, his parents decided it was time to move.

His new hometown of Oakland, California, had its own set of difficulties; Bolton had never even seen an inner-city environment before, let alone learned to navigate in it. By the time he reached high school, however, the family had moved again, and Bolton attended the well-respected and fully integrated Berkeley High School. “I went from Fort Worth to that–and not to mention all the student riots going on!” says Bolton. “But my parents’ belief was that education would be our entree into a world of paradise.”

And while it may not be paradise, the firm he has built over the past two decades, Percy E. Bolton Associates, is something he can be proud of. And the best part is that he built it by doing things his own way.

For one thing, unlike most planners, Bolton is not always a client’s financial director. Sometimes he is: He has five families for whom he provides comprehensive financial planning, investment management, and estate planning for a retainer fee. But often he isn’t: He has 56 clients for whom he provides investment management only. “For the five retainer clients, we are the quarterback. But in other cases, we are a member of a team,” he says. “We see ourselves as consultants, and if they have other competent people, I don’t mind being part of a project team.”

More startling, however, is a document that sounds like something right out of Mission Impossible: the “self-terminating” contract. While most planners knock themselves out to keep clients for life, every five years or so Bolton actively shows clients the door, inviting them to take a look around and check out his competitors. He sends out requests for proposals to other firms and encourages clients to ask their CPAs, lawyers, and banks to suggest candidates. He even helps clients compile a list of questions to ask. “Out of the list of 10 or so, they do a short list, typically me and two others,” he says. “Then I come in and bid for their business as though I don’t know them, and the others do the same. It’s kind of like being interviewed for a job. And may the best firm win.”

Voluntarily holding your own feet to the fires of competition might sound masochistic, but Bolton says it’s invaluable for rejuvenating client relationships, cementing clients’ confidence in his abilities–and keeping his firm on its toes. “Unless clients go out and make that search for someone new, they really don’t know whether or not you’re providing them with the best and latest services,” he says. “[During the search] they can determine if our fees are competitive, and that forces us to be more efficient. The whole process forces us to constantly be innovative.” Bolton says he’s lost only one client to the re-interview process–and, he adds cheerfully, after two years, the client came back. “It’s a great way to keep people from taking you for granted, and keep yourself from getting stale,” he says.

Bolton doesn’t want his staff getting stale, either. With the exception of the antique chairs, grandfather clock, and antique piano Bolton has collected, all the furniture in the one-story, red brick office he recently moved to in Pasadena is on rollers. And every few months, Bolton makes it a practice to reorganize everything. “We don’t want anyone to feel too safe,” he says. “We want people to be very open to change.” (He admits that the re-arranging drives one staff member batty, but the other two get a kick out of it.) For the moment, at least, the office is set up as a series of workstations, each with a particular function. “If you want to do scanning, there’s a station for that; if you want to do PowerPoint, there’s a station for that,” he says. “Everything is networked, but each station has ancillary equipment attached to it that is dedicated to that function.” Since Bolton charges clients in the manner of a law firm (an hourly fee, plus costs, including staff time), each station has a time sheet where staff can record their time.

Beyond the Pale

But perhaps what makes Percy E. Bolton Associates most different from other firms is its clientele. More than 60% of Bolton’s clients are African-American, an enormous percentage compared to the average planning firm. Why? Most firms, he maintains, have simply not tried to attract black clients. “The larger community never assumed that we had any money,” he says. “When I used to go to [industry] conferences, everybody there thought my clients were Michael Jackson and Bill Cosby, because those were the only black people they thought had any money.”

Having grown up with African-Americans of varying incomes, Bolton never thought any such thing. Now he’s ahead of the game, and the larger, mainstream firms are playing catch-up. “Minorities are younger, they are becoming more and more affluent, and the growth rate of the minority community is going to be a lot higher than those who are in the majority,” he says. “If these firms are planning on some kind of survival strategy, they have to begin to cater to the minority marketplace.”

True, he admits, there are unique challenges in serving most African-American clients. Many are the first generation in their families to have discretionary wealth, and they’re wary of ceding its care to a stranger. “It’s the first generation that’s starting to hire professionals for their needs and wants, whereas in the white community, you have families who have been delegating and hiring for generations,” he says. “So there’s an issue of suspicion, an issue of trust.” What’s more, some of his clients don’t even know anyone else involved in investing, let alone anyone who hires a professional to handle it for them. “Often no one else around them is doing this,” says Bolton. “They’re exceptional. In their entire group of friends and relationships, they may be the only one investing.”

Bolton says his clients’ inexperience was even greater back when he launched his firm. “My first client ever, a graduate student at UCLA, had $30 to put into a monthly investment program, and it took me nine hours to get that $30 from him! The commission was 8%, so I made $2.40!” he says with a laugh. “But it was like that a lot in the beginning of my career–I’d spend all day explaining a mutual fund.” Today, the advent of 401(k)s has expanded many African-Americans’ familiarity with the markets, but Investing 101 is still par for the course for new clients and potential clients. “I think the educational part that we do goes beyond what most financial planners do, to a large degree,” he says. “With each one of our clients, we have to educate them a great deal about the investment business.”

Part of that education includes a discussion of risk tolerance, and the definition of what makes a “safe” investment. “One interesting thing about our community is that we have a tendency to buy things that are safe, or are considered safe. And securities are not in that category,” he says. Many clients, particularly older ones, believe that real estate is the most prudent investment. Younger ones, on the other hand, have begun to show more receptivity to stocks and mutual funds. “This is the first generation I’ve seen that has an interest in the stock market,” he says. “It’s increasing, but it’s brand-new.”

With a firm where nearly two-thirds of the clients–and four of the five high-net-worth retainer clients–are African-American, Bolton believes he’s well-positioned to serve the growing African-American population and its attendant wealth. He believes the field of prospective clients has scarcely begun to be tapped. And given that his first client, the grad student with $30 per month to invest, is now worth more than $4 million, he knows the difference he can make is worth the effort.


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