Many people today do their own Internet research to find the best deals on travel, cars, real estate, and, yes, even financial advice. When it comes to establishing a presence on the Web, most advisory firms take the “nameofcompany.com,” approach, reasoning that if people know your name, they’ll be able to find you online. But what about an advisor Web site URL that states concisely what it is you have to offer? That was certainly the avenue taken by Greenbaum and Orecchio, the Old Tappan, New Jersey-based wealth management firm that can be found on the Web at www.FeeOnlyWealthManagement.com.
Wealth management is a phrase with many meanings whose consensus definition continues to evolve. “The basics would be the integration and the coordination of ongoing investment management and financial planning,” explains Tom Orecchio, one of the firm’s two principals. “We’re going to look at all of your financial issues up front and deliver a comprehensive financial plan–then help you implement that plan over time. We tell our clients, ‘Anything that touches your financial life, we want to help with it.’ That’s key to us. If they have questions about the sale of their home, if they should lease or purchase a car, what it would cost to buy a second home, or about the sale of their business. Certain areas are outside the realm of our expertise, so we will work with their other professionals, or if they don’t have one, we will coordinate the efforts to bring in other professionals.”
Toward that end, the firm has pretty strong relationships with several accounting practices and law firms in the area that specialize in trust and estate work and tax planning. “We also have a CPA and an EA (Enrolled Agent) on staff,” says Orecchio, who counts the CFA, CFP, ChFC, CLU, and AIF designations among his credentials. “We have specialists in retirement and taxes, insurance, and alternative investment structures as well as traditional investments.”
The biggest issue these days for most of the firm’s clients is the ability to maintain their standard of living during the retirement years, but retirement per se isn’t the issue for the firm. “We don’t look at retirement as the issue so much as being financially independent,” notes Orecchio. “We define that as being able to maintain your standard of living, whatever the standard is that you choose, throughout the rest of your life. Whether they choose to work after that, to volunteer their time, or whatever else, that’s their choice. Our focus is on helping them maintain that financial independence and achieve their goals.”
A Model That Works
Tom Orecchio got into the business right out of college with a firm, Heritage Financial Group, that offered financial planning tied to product sales–mutual funds and insurance products, especially variable and fixed annuities. He worked in that part of the business for about five years, all the while thinking that there must be a business model that would allow him to offer financial advice that wasn’t built around selling something that would pay him a commission. Someone who worked in the same firm told him about a planner named Gary Greenbaum who had an office just up the road and was looking to bring on another planner.
At that point Greenbaum had been running his practice for about 12 years. For the first 10 he only wrote financial plans and did no asset management. By the time Orecchio came on board, he had eight clients and $10 million under management. Ten years later, Greenbaum and Orecchio boasts 151 client relationships and $265 million under management.
Orecchio had already received his CFP and ChFC certifications before partnering with Greenbaum, and it was during his studies in these programs that he began to look for a new business model. “What I was learning in those programs and in classes was different than what I was delivering,” he recalls. “I was eager to find a place that was delivering financial planning and investment management on a fee-only basis that was focused around process rather than product. That’s what attracted me to Gary.”
Today the firm bears the names of both partners who have equal stakes in the company. “We’ve split the duties,” explains Orecchio. “He does most of the technology, compliance, and workflow management. I do most of the client acquisition, client management, and staff management. Of course, there’s some overlap. I get involved in some of the technology issues and Gary has a couple of client relationships that he maintains.”
Orecchio’s duties however, extend beyond the areas he mentioned, among them serving as head of the firm’s investment committee. “We have several committees for the different services we offer to clients,” he explains. “All the wealth managers sit on the committees, but those with specialties head up the committees.” His partner, who is certified as a Chartered Alternative Investment Analyst (CAIA), heads the alternative investment committee, and another advisor oversees the financial planning committee.
The firm’s average client is in his late 50s to early 60s, is retired or thinking about retiring, and has a couple of million dollars worth of investable assets. “My average client size is $3 million, the same as my partner, but we have clients who have $1 million with us. Our minimum investment is $1 million, but our typical client is somewhere between $2 million and $10 million.” There are also a handful of clients in the $750,000 range–leftovers from when the client minimum was $500,000.
Typically, wealth management clients pay a percentage of the assets under management as a fee that covers all asset management and financial planning services. For clients with fewer assets, investment counsel is provided on an ongoing basis and financial planning is done on an hourly consulting basis. The same is true for family members of existing clients who need a financial planning session.
Investing for Retirement