When worldwide turmoil hits the financial markets, as was the case in the last week of February, many advisors shift into crisis management mode as they strive to reassure clients about their investments and financial futures. Charles Massimo says that for most of his clients, the recent scare was a nonevent.
“The clients who have been with me for a while do not panic at all,” says the president of Garden City, New York-based CJM Fiscal Management. “They know if they call me that I’m going to tell them that this has very little to do with our long-term approach. The worst thing to do is to get emotionally involved with what’s going on in the markets.”
Massimo says the reason his clients can remain so calm in times of upheaval is that he takes plenty of time to educate them about modern portfolio theory and the investment approach he favors. “We do comprehensive wealth management,” he explains, “but what I think sets us apart is that we have a disciplined approach to our investment management portion, which is a passive management approach. The clientele we have is looking for the most part to preserve their wealth in the most prudent manner possible and still get a fair amount of growth.”
It was Massimo’s desire to put a passive management philosophy into practice that led him to leave the safe confines of the wirehouse world, where he was VP of investments for Smith Barney, to strike out on his own as an independent advisor. He says he had read books and articles outlining the passive approach used by Dimensional Fund Advisors, and “a light bulb went off and I said, ‘Hey, this is the way to do it for my clients.’ And since DFA is not available in any wirehouses, I had to go off and become an independent.”
As an independent, Massimo aims to put as much of his time as possible into actually working with and for clients, which has led him to outsource as much of the other stuff as possible. In addition to solely using DFA funds to build his clients’ portfolios, he uses Loring Ward to provide backoffice services and his broker/dealer, Royal Alliance, for help with compliance.
“I decided when I started this firm that I wanted to spend all my time with my clients, not time doing the operational things that bog down advisors and keep them from seeing their clients,” he says, “so I outsource everything possible, and I’m just nurturing my relationships with my clients.”
Staying in Touch
The keystone of Massimo’s business is what he calls his “high-touch relationship,” with each client, which includes at least 40 “touches” a year. Included are quarterly face-to-face meeting with all clients, weekly e-mails, a quarterly newsletter, and four to six major client events. “Every client gets a call from us at least every 60 days. That’s clockwork for us,” he says with pride.
Maintaining such personalized contact obviously becomes more challenging as the client roster increases. “I always envisioned CJM as a small, exclusive club where clients are serviced exceptionally well,” says Massimo. “It’s always been about the quality of the clients, not the quantity. My goal is to be at double my size within three years, but without double the clients. I’m really looking to increase the amount of assets I bring on board or the type of client I bring on board.”
Although he’s a registered rep, Massimo’s practice is strictly fee-based and the only investment vehicle he uses are the DFA funds. “We take a comprehensive approach, but as we tell our clients, you pay one annual fee and with that fee you basically have us on retainer for everything that you need financially. We really want to be their go-to-person and we don’t want to charge a la carte for that.”