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Financial Planning > Trusts and Estates

At The Top of his Game

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When a person answers the “How are you?” of an unknown phone caller with “Well, not too bad for an old, fat guy,” it doesn’t take much, after you stop laughing, to figure out that he doesn’t stand much on formality or being Mister Comme Il Faut. (When he later lists his favorite hobbies as “tennis and sleeping,” there’s really no doubt.) At age 70, planner Gene Balliett could be forgiven for a bit of stodginess and reserve, but somehow he manages not to take himself too seriously, despite the fact that he manages a pot of money worth “well into nine figures,” heads a firm of a dozen employees, and has a shelf of 11 financial planning and practice management books with his name on the cover.

But don’t be fooled: Not taking himself too seriously doesn’t mean he treats his firm as a lark. While his retired peers tool around in a golf carts, and by rights he should be scoping out a prime, palm-treed hammock location to practice his hobby of snoozing, Balliett is busy training employees, editing newsletters, lunching with clients, and developing new services, including everything from trust services to malpractice insurance solutions for his many doctor-clients. Although he does arrive at the office fashionably late (10:30 a.m.) most days following his morning tennis date, retirement in the all-shuffleboard-all-the-time sense isn’t even on the horizon. “When people ask me when I’m going to retire, I tell them I’ve been retired since 1967, from the moment I went into business for myself,” says Balliett, whose firm has been based in Winter Park, Florida, for the past 15 years. “Retire? To do what? You can’t be more retired than doing what you like to do.”

Fortunately, Balliett’s “best friend and favorite person in life or literature,” his wife and business partner, Dee Balliett, defines retirement the same way. A co-author with her husband of two financial planning books, Your Financial Plan (Professional Communications, Inc., 1997) and Your Financial Plan Is a Vision of Riches (Professional Communications, Inc., 1998), Dee was 59 years old when she started her master’s degree in mental health counseling, and she currently leads the firm’s financial planning team. Determined to be a lifelong learner, both she and her husband are proud of the fact that they consistently earn half again as many continuing education credits as they are required to by the National Association of Personal Financial Advisors (NAPFA). And she says she, too, is as retired as she can be.

Clearly, the Ballietts aren’t much for coasting; if they were, they certainly wouldn’t have tackled the firm’s most recent transformation, which turned Balliett Financial Services, Inc., a planning firm under SEC regulation, into Balliett Financial Services and Trust Co., an affiliate branch office of NITC (National Independent Trust Company), which is regulated by the Office of the Comptroller of the Currency. NITC is a nationally chartered trust company and non-depository commercial bank.

Gene Balliett remains convinced that the transformation was worthwhile. “I believe that much of the future of financial services will belong to genuine fee-only advisors who work either in a good, independent trust company or with one,” he says. “Control is the issue; without it, I can’t see how I can have any chance of ensuring that the wishes of my client, as the trust’s creator, will be faithfully carried out for two and three generations or more.” That’s all very nice, but it hasn’t kept the actual process of transition from being a royal headache. “I was [Tom] Batterman’s guinea pig,” he says, referring to one of the founders of NITC. “The transition from [being an RIA under SEC oversight] to regulatory oversight by the Office of the Comptroller of the Currency is a sorry story of blunders and, well, situations. But then, maybe the first pig through the maze is the one that perfects the system. If that’s the case, I’ll stop whining.” Balliett notes that while he was an early investor in NATCO, the National Advisors Trust Company, based in Kansas City, and remains “among its many cheerleaders,” he turned to NITC because regulators told him that no NATCO branch would be approved until at least three years after the organization itself was off the ground and turning a profit. “That moment was not yet in sight in 2000,” he says, when he contacted NITC.

Balliett says clients have been slower to sign on for his trust services than he had expected, but notes that the firm hasn’t promoted them much, either, preferring to wait until the systems are more smoothly coordinated.

Trust and Consequences

When talking trusts with clients (whether those provided through his firm or elsewhere), the tool he most frequently recommends is the revocable living trust. “We uniformly tell our clients that they’ve got to have a revocable trust, and should own all their significant assets in it,” he says. Without it, clients’ assets will be dragged through the probate process, which is costly, time-consuming, and beribboned with red tape. “Lawyers, no matter what state they’re in, will tell you that ‘Probate is a problem everywhere else, but not in our state,’” he says, “but probate is still something to be avoided. Some lawyers retire on the money they make from probate. And when you have a sizable population that has outlived the rest of their families [as in Florida], and there’s nobody looking over the shoulder of the lawyer after the old person dies. There’s probably a Pulitzer Prize awaiting somebody who will do the story on how much legal plunder goes on in the name of estate planning or probate closing.”

Balliett’s clientele is a natural market for trust services because he serves so many physicians. Worried about being wiped out by a malpractice lawsuit, doctors can use domestic or offshore trusts to protect their assets from patients who might sue them. Balliett offers everything from a do-it-yourself model that can be cranked out by Nolo Press software to more complicated offshore trusts drawn up with the help of expert estate planning attorneys. He generally prefers trusts to the other asset protection strategies available. “There are a lot of way to shield assets, but too many doctors think of only one: Put them in your spouse’s name,” he says. “Which is a sort of sneaky thing, and it doesn’t work, either.” For one thing, when the plaintiff’s attorneys hunt around and find that, hmmm, Dr. Doe has zero assets and his wife has several zillion, they’re not stupid; they’re going to sue Dr. Doe for the zillion dollars–and Dr. Doe may get hammered for fraud, too.

The other problem is illustrated by a couple who learned it the hard way. Against Balliett’s advice, a doctor put all his assets in his wife’s name. Soon thereafter, the wife was in a car accident in which she was at fault: She ran a red light, and the passenger in the car she was driving was killed. In determining a judgment, the jury took every dime she had–which was also every dime her husband had, since all their assets had been in her name. The couple was left with nothing.

Afterward, the couple returned to Balliett at a seminar he was leading for physicians and told their cautionary tale to the group. “You can bet that after that, none of those doctors went home and ‘protected’ their assets that way!” says Balliett.

He also cautions his doctor clients that they can’t protect all their assets from potential lawsuits, a fact that many of them don’t seem to realize, he says. “In this life, if you cause grievous injury to someone, you’ve got to compensate them for the damage you’ve done, and that’s whether you punch them in the nose or slice through a tumor while you’re operating on them,” he says. “Those things aren’t supposed to happen, and if they do–and even if the doctor didn’t mean to, or was tired, or sick, or just had bad judgment that day–they gotta pay.”

Balliett’s goal is not to get the doctor off the hook entirely, but to make sure, through insurance coverage or simply savings, that a doctor has enough money available to settle a case fairly with a patient, and only then consider ways to shield the balance of the doctors’ assets. “If [plaintiff's attorneys] know that that’s all there is, and it doesn’t matter how much they threaten you and how many dollars in legal fees they throw at you, that’s all they’re going to get,” he says, “then they’ll settle for that amount, if it’s a reasonable amount.”

The Write Stuff

In addition to trust planning and advice on the usual gamut of financial planning issues, Balliett provides his clients with some unique perks. One is a one-page poster/newsletter for doctors to post in their office lunchrooms; topics are explored in a simple Q&A format, and answers are directed at young, not-so-rich individuals–the typical profile of a nurse, receptionist, or other member of a doctor’s staff. The poster, designed with classy, clean lines by a contract employee, isn’t intended so much to attract the staff as clients as to simply help the doctor provide a service to them. “It’s just a perk,” says Balliett. “And even the children of doctors who work in Daddy’s office need to learn about money; these things are shared with them as well. I don’t know anyone else who does this.”

While many advisors regularly mail some sort of client newsletter, Balliett’s stands out both by size (usually 12 pages) and its design (the pages are clean and uncluttered, with a magazine-like design; no cheesy clip-art and goofy border overkill here). Balliett used to write the whole thing himself; he now writes parts of it and edits pieces submitted by his staff. With clients in 30 states, the newsletter is an important component of his communication efforts.

And one need only read his newsletter, one of his books, or even his “All About Us” brochure (a substitute for the Form ADV for clients, now that he’s no longer regulated by the SEC) to see that this is a guy who takes the printed word seriously. He should, given that his resume from 1950 to the mid-1970s includes stints as a writer, photographer, and editor at everything from an army base newspaper in Alaska to The Cincinnati Enquirer and Medical Economics magazine–not to mention the slew of financial planning and practice management books he’s authored since then. From the day his fifth-grade teacher in a country school outside Dayton, Ohio, first suggested he might one day become a professional writer, Balliett’s ambition was to become a journalist, preferably the news editor of a big-city daily newspaper. (He says he still fantasizes about being rich enough to buy such a publication and “retiring” to become its news editor; for the moment, at least, he’s contenting himself with working on two other financial planning books.)

Fresh out of high school in 1949, Balliett couldn’t afford to go to college to study journalism (or anything else, for that matter). Instead, he worked for a year on an assembly line, operating a hydraulic press–and going cross-eyed with boredom. But he learned something more than how to make metal-alloy rotors that year. “In that lonely, challenging year, I came to recognize the heroism of fathers who labored all of their adult lives at dangerous, boring jobs they despised, and doing so because no alternatives were open to them and they had families to shelter, feed, and clothe,” he says. “That’s the year I came to see the relationship money has to dignity and choices.” To this day, he tries to share that lesson with all his clients.

His own dignity and choices got a nudge from fate when the Korean conflict erupted; when he enlisted in the Air Force, primarily to avoid being drafted into the infantry (“I knew I’d surely be dead even before I got off the boat,” he says), the Air Force sent him to the Army War College to study–surprise!–journalism. From there, he was sent to write and edit a newspaper at an army base near Fairbanks, Alaska, then to Montgomery, Alabama as a staff writer, and then, after his enlistment was up, back home to the Hamilton (Ohio) Journal & Daily News. In 1954, he enrolled at Ohio State, and “the GI Bill and Dee, teaching, put me through college,” he says. His major, of course: journalism.

After graduation, he worked for The Cincinnati Enquirer, then Newsday, finally trading in the daily-newspaper beat for the position of editor at Medical Economics, a financial magazine for doctors. The siren song of entrepreneurship grew louder as he began doing consulting work, advising doctors on practice management and financial planning issues, but it wasn’t until after another five years, this time as editor of Physician’s Management magazine, that he succumbed. The Gene Balliett Family Finances Seminar, a three-day program presented to physicians across the country, ran from 1979 to 1989; most of Balliett’s current clients met him through the seminar. In 1986, he returned to office-based practice, and by August 1987 he had $8 million under management. After some very prescient investing decisions both before and after the crash of October 1987, he was managing more than four times that much. “By Monday, October 12, 1987, the Dow had fallen nearly 9%, and I moved every dime into money funds. Black Monday was one week later,” he says. “We moved from zero to 100% back in the market less than a week before the S&P bottomed out on December 4. The word-of-mouth must have been marvelous; a few months later, we had $35 million under management.”

Balliett says he doesn’t have time to miss his journalism career much; what with books, newsletters, reports, and Web site content, he’s too busy writing. And that’s a large part of what financial planning is about, contrary to popular belief, he adds. “There are people who do financial planning by only talking to people; by and large the new movement toward hourly consultation is pretty much talk, talk, talk,” he says. “But other than that, those who are doing comprehensive financial planning are in the business of writing–writing reports.” Although he believes his writing skills are one of his greatest strengths as a planner, the downside is the frustration he feels when supervising planners who aren’t similarly words-minded. “I think many people who are majoring in finance or economics who say they want to be a financial planner are way off base, because what they think they want to do requires writing skills, and they probably don’t have them,” he says. “One of our greatest challenges is getting financial planning [employees] to write a simple report.” He says he’s generally pleased with the work his employees are producing, but the amount of coaching and training required to get to this point surprised him.

With clients to meet, new services to organize, and newsletters and books to pen, Gene Balliett, age 70 going on 40, is still going strong, and remains convinced that productive, enjoyable work is better than any traditional kind of retirement. “I know I hate golf, and am entirely appreciative of roses when other people grow them. I believe my greatest satisfactions come from work,” he writes in his book Make Your Kid Rich (Professional Communications, Inc., 1993). “If you are doing what you most like to do, you are retired. If you mostly like your work, then alter it however you should, to make it better. When your day goes mostly the way you most like it, rejoice.” Pretty good advice, no matter how old you are.