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Built for the future

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Greg Hammond and Scott Iles are in for the long haul. They are relatively young for senior advisors – both are 38 years old – but the age factor has not at all hindered their clients’ confidence in their abilities. Rather, it has tended to give clients peace of mind that Hammond and Iles will be around to see the retirement plans they put together through to fruition.

Hammond and Iles are partners in Kelly Financial Group LLC, a non-proprietary investment company with a staff of 10 based out of Weatherfield, Conn., with branch offices in Old Lyme and Woodbridge, Conn. In January 2005, Hammond and Iles purchased the company from Walter J. Kelly, who founded the company in 1984.

The transition has been seamless, as they have continued to build the hybrid practice with a current roster of about 1,200 clients between all three offices. As of last November, they had brought in about $25 million in new assets to the firm in 2006. Out of that, $11 million was in their management program with no-load mutual funds, $3.5 million was using non-traded rates and the other $10.5 million was using annuities. In 2005, they did $13 million in annuities and added $8.5 million to their managed money accounts.

Hammond, who lives in West Hartford, Conn., serves as president and chief compliance officer. He is a CPA and CFP and specializes in analysis, mutual funds, taxation, and financial planning. Iles, who lives in Wolcott, Conn., is the vice president, specializing in retirement planning, Medicare benefits, investments, and life insurance. Both are registered reps.

While they have only known each other for about five years, the two have much more than their age in common. Both are married and have two children (Iles 11- and 4-year-old boys; Hammond 9- and 6-year-old girls) and both say spending quality time with their families is their No. 1 priority. Along those lines, they generally put in between 45 and 60 hours per week but try to work little on weekends. That leaves time for Iles to coach his kids’ sports teams and the occasional golf or fishing outing, while Hammond enjoys golf and tennis and is heavily involved in his church.

SMA: How did the two of you first get together?
GH: Basically, as my role in the company was expanding – I was moving up the ladder with Intelix Financial Group – I had to, at that time, hire somebody to replace me. I placed an ad and interviewed Scott and we hit it off well at the beginning and we’ve made a good team. He’s been with me ever since.

SMA: I understand that when you bought the company in January 2005 you managed to retain every single client, even with the transition. That seems like a pretty impressive feat.
SI: We were thrilled with that. Part of the reason is that most of our clients already had a relationship with Greg and me. Throughout the years, we were in a lot of meetings with Mr. Kelly. We were really learning from him how to approach our clients and how to help them out. He put a lot of responsibility on our shoulders so that when he pulled away and we took over, [clients] were more than thrilled to keep that relationship with someone they knew. They knew that we knew everything about them already.
GH: The transition was very seamless. You didn’t notice a change in the firm or the way that we serviced our clients.

SMA: You each have different areas of expertise. Can you tell us a little bit about how this works to the advantage of the partnership?
GH: I think both of us bring very strong expertise to the table. With my accounting background, certainly from a tax standpoint, I bring a lot of strength with that knowledge and experience to the table. I think my analytical nature provides well, in that I supervise our management program, so our selection of investments and mutual funds and the management portfolio fall in my duties. Scott complements that well with his banking and insurance experience. He brings to the table areas that I’m not as strong at that he excels at. His life insurance and his back-office banking experience provide us a lot of competency, especially when you are competing against banks that are taking on more and more roles in financial planning and are expanding their roles.
SI: The financial services industry is changing so much in that everyone is trying to get into the investment world. Knowing how banks go after prospective customers – and that’s how they categorize customers – helps us a lot because most of the time the bank is just trying to sell something. They’re not trying to manage a relationship with that person.

SMA: You both are a few years shy of your 40th birthdays? Has your relative youth presented any challenges in working with seniors?
SI: I have to say it really hasn’t. I believe that it’s actually an asset. Our clients come into this knowing this is going to be a long-term relationship, and the fact that we’re not 40 yet basically indicates to them that we’re going to be here for a long time. They’re not going to have to worry about us retiring or, God forbid, dying anytime soon, so they won’t have to be shopping around for another advisor because of it. We do have a lot of experience and we’re not fresh out of college. We’ve been working at this for quite some time. I think our approach and our plans speak for themselves.
GH: As Scott was saying, I think the strong point is that we’re not only able to put together a retirement plan, but we have the longevity in our careers to basically see it through to fruition. They don’t want to put together a plan and then have their advisor retire in the middle of it where they totally have to shift gears to another advisor.

SMA: Can you talk about your low-pressure sales style?
GH: I think we tend to be successful because of the low-key, no-pressure atmosphere of Kelly Financial Group. After a prospective client attends one of our seminars, they are invited to come in for a complimentary first meeting in which we review their entire financial picture. That leads to a second meeting where we have an opportunity to review everything and present to them our recommendations on changes, if any, to their financial picture and allow them to digest that, think about it and come back to a third meeting where they can ask any questions they have before we really do any business and put anything into place. It’s that structure of not feeling rushed and taking the time to make sure all of the investments that we use for all of our clients are well explained and that our clients understand not only how the investment works and operates but also why we’re recommending it as part of their financial picture. I think that aspect is what makes us different and why we excel in what we do.

SMA: Tell me a little bit more about your seminar program – is Walter Kelly still involved in giving seminars?
GH: We had 36 seminars [in 2006]. Presently, Walter Kelly is our primary speaker at all of our seminars. He is a very dynamic and talented speaker, so we felt that – although I think Scott or I can do a seminar – he provides an excellent skill level there that would be hard to duplicate. Part of our agreement with him when we did the transition of the firm is that he would continue as a consultant with the firm as well as provide those speaking engagements for a period of time. It’s just a general financial planning seminar and then it covers a variety of topics to provide some information to clients to encourage them to examine their current financial picture to make sure they have everything in order.

SMA: What is your take on the indexed annuity debate?
SI: Actually, we were just discussing that, and as far as we’re concerned, it doesn’t really impact us at all. We actually think [having them be classified as securities] would probably benefit us more than it would ever hurt us. Compliance is always something that we’ve taken very seriously. The fact that there is some extra supervision with the broker/dealers, we don’t feel that would be a negative on our part, but we don’t think that it should be regulated. We don’t agree with that.
GH: I think we’ll actually benefit from that just by the fact that those agents that are out there that solely sell insurance and annuity products kind of have an unfair advantage over a securities registered advisor because their marketing isn’t scrutinized as closely as ours. So they, I think, can put out marketing materials that may not float with our broker/dealers. So, the regulation and the scrutiny over equity-indexed annuities kind of levels the playing field for us. It brings those agents down to the same level.

SMA: In a more general sense, what financial issues do you think seniors are most concerned with today?
GH: I think we’re definitely seeing that shift toward income as being one of the primary concerns of our clients and retirees in general. The old three-legged stool – pension, Social Security and investments – is no longer there for many of our clients. So it’s really up to the investments to carry those clients on through a continued expanding length of retirement. We’ve definitely seen a focus toward income. As a result of that, we’ve seen a definite shift within our product mix, which ends up becoming more income focused.

SMA: Can you tell us a little bit about your approach to ethics?
SI: Basically, my philosophy has always been if you do the right thing for your clients all the time, it will always work out financially. You might not make money on everyone you meet, but the word gets around when you are trustworthy. We actually picked up clients because someone else came in and we didn’t sell them something. They went back and told other people. That resulted in them coming in and now they are a client. So ethics is always No. 1 with me, and my philosophy has always been that when I die, I don’t want anyone to go to my wake saying I took advantage of them. That’s basically the way I conduct my business from day to day.

SMA: Can you explain briefly the “team captain approach” to managing your clients’ finances?
GH: Yes. We see ourselves as the team captain in that when we meet with a prospective client, we examine all areas of their financial picture. We’re not only looking at their investments, we’re looking at their insurance – both life insurance and long term care insurance – the different ways they are handling risk in their portfolio and their assets, as well as the structure of their overall portfolio and assets and their estate planning. We will examine all these areas, and we have developed relationships over the years with many other fine professionals who specialize in different areas, whether it is legal or accounting. So we are the ones examining the picture, and when we see a need we can then refer our clients to someone to fill that need. Quite often, when we have a prospective client come in, sometimes you see that they’ve dealt with advisors that were just selling products, and their financial picture is scattered with no central focus. We try to bring that financial picture in line with what they want to accomplish.

SMA: How do you stay motivated? What makes you go to work every day?
GH: I think the key motivator is that we’re making a difference. At the end of my life, I would like someone to stand up and say, “He made a difference in this world.” What attracted me to move from public accounting to financial planning is that you get to work with people to help them realize their financial dreams and goals for retirement, for education for their children and grandchildren. You get to help people make differences in their lives. That’s a very rewarding aspect of this profession.
SI: To piggy back off that, it is easy to stay motivated when you really love what you do. Coming into the office on a Monday morning for a lot of folks is a real drag, but to me it’s not. I know that my schedule is loaded with appointments. Everyone that I get together with, they are just genuine people, they’re great people. We want to help them and, as Greg said, it is extremely rewarding. The fact that we have these ongoing reviews, it’s like we see these people every six months. It’s like catching up with old friends. We take an hour for a review. We talk about finances for maybe 20 minutes and the rest of it is talking about their family and what is going on with their children and their grandchildren and what their plans are for the coming year. It’s just a great line of work, and it’s easy to get motivated for. And the money is not bad. To top it all off, we actually get paid. GH: It pays to help people.

SMA: In the next five years, how do you see the landscape of what you guys are doing changing?
SI: We definitely are seeing it changing right now with the focus on income planning and the transfer of wealth from what they call the World War II generation to the boomer generation. Planning for income is definitely in the forefront. That and long term care costs. What do you think Greg?
GH: I would agree. I think those will be the two main issues for every retiree: planning your income and planning your expenses and potential expenses. Certainly, the No. 1 reason why our clients continue to work, or choose to work (besides the fact of enjoying what they do), deals with health care costs. A number of retirees will work until 65 for the pure reason that they want to make sure they have medical coverage in place. It’s the No. 1 expense on the expense side that really factors into making those retirement decisions. That ties in closely with those undetermined, unforeseen, long term care costs that many of our clients who are dealing with their own parents are experiencing first-hand. [They are seeing] how that can truly destroy a life’s worth of savings and planning.