Blue-Collar Advisor

Pittsburgh can be considered the epitome of blue collar America. Located at the confluence of the Ohio, Monongahela, and Allegheny Rivers it was an ideal place for the development of the steel industry. Individuals who toil in the giant steel mills and in the coalmines that feed those enormous furnaces know what it is to work for a living. It’s also a place where that same work ethic is put into practice in sports, football in particular.

That blue-collar work ethic and passion for football also comprise the background of advisor P.J. DiNuzzo, who founded DiNuzzo Investment Advisors in Beaver, Pennsylvania, in 1989. Like many of the industry’s pioneers, DiNuzzo came to the advisory profession as a second career. In his case however, he was only 29, but had spent two decades working in his family’s restaurant.

Family and Football

All four of DiNuzzo’s grandparents, from Italy and Poland, left their homelands for the promise of a better life bought with sweat in the steel mills. As tough as life in the mills may have been, he says it was definitely better for his grandmother than the job she had as a teenager in Italy, where she worked in a quarry, making big rocks into little rocks with a sledgehammer.

DiNuzzo’s father, after 25 years in the steel mills, craved to be his own boss and put his life savings into a buffet-style family restaurant with a small lounge and hotel. In grade school, P.J. started working there afternoons and weekends, when he wasn’t playing or practicing football. He went to college on a football scholarship to Indiana University and also played one year at the University of Pittsburgh. Following his college football days, DiNuzzo went back to work in the family business, while continuing with his education.

DiNuzzo speaks fondly of the years he spent working alongside his parents and his brother in the restaurant, but he was aware at a young age that it probably wasn’t what he wanted to do for his entire life, especially if he wanted to spend time with his own fledgling family, outside of work. “It’s a real meat grinder of a business, seven days a week,” he says with the voice of experience. “People talk about the hours they work, but 60 to 70 hour weeks are the norm in the restaurant business and you can go years without taking a week’s vacation.”

His father had always been a saver and had a few brokerage accounts but really didn’t understand stocks and bonds or the principles of investing. Surprisingly he found that his teen-aged oldest son did and turned to him for investment guidance. With the knowledge that this was something for which he had a knack, P.J. began planning his transition from the family restaurant business to the advisory business.

After finishing his BA, he continued his education because after all the lessons he had learned in football about game preparation, he wanted to be sure that he was ready before he started to play.

“I may have gone a little bit overboard, he says of the 10-year period in which he got his bachelor’s degree in business administration, two masters degrees (finance and tax law) and passed the C.P.A. exam, all the while continuing to work in the family business. He also got married and fathered three sons in that time.

One of the things that hasn’t changed for DiNuzzo since starting his advisory firm is working with family. His brother, Mark, is executive vice president and a firm principal. Mark’s wife, Jackie, is the firm’s office manager and assistant compliance officer. And his mom, in her 70s, works there part-time, three days a week, as she has done for more than 10 years.

“Maybe I overestimated the competition,” he says of his intensive self-preparation, “but we always ask in the restaurant business, ‘Are you selling the steak or the sizzle?’ A lot of people in this business sell the sizzle.We’re pretty much 100% steak, although we’ve been adding a little sizzle in the last few years.”

Building His Own Path

A lot of advisors begin their financial services careers with American Express or Merrill Lynch or some other large firm. Starting with a company that is well known and can provide some clients, a regular paycheck, and on-the-job training makes that route extremely attractive. He says maybe he didn’t know any better, but DiNuzzo did it the hard way and has been a fee-based independent from day one. Starting out that way, with zero dollars under management and no client base, DiNuzzo says, made him appreciate his clients all the more.

“There was no minimum at the beginning,” he recalls. “When you’re just starting off, you’re looking to establish a name for yourself and do the right thing. You’re building it account by account. If you get someone with $2,000, or $5,000 or $10,000 in an IRA, that’s a good thing.”

Launching a single-person independent advisory firm, particularly when DiNuzzo did in the early days of the profession, is not an undertaking for the weak of spirit. For the first three years of his practice the majority of DiNuzzo’s clients were family members. “I didn’t draw a salary out of the practice for years,” he says. “People just forget about all the heartaches and all the obstacles and hurdles that you had to get over early in the business,” he says. “It takes forever to get to the first million dollars, and then five million, and ten million. Once you get to the size where we’re at now, it gets a little easier. We had a day a couple of weeks ago [in early July] where we were up over $2 million just by the organic growth of the portfolio without bringing in a new dime that day. It starts to take on a life of its own.”

When DiNuzzo launched his practice he was trying to use the best passive investments available. “I was customizing portfolios using Vanguard indexes and the best replicas I could find,” he says. A few years later when Dimensional Fund Advisors launched their family of funds, DiNuzzo says he found they were just what he had been seeking, and he became one of the first 100 advisors in the U.S. to offer them. But like many other things in those days, it wasn’t easy. When he first became associated with DFA DiNuzzo couldn’t get his custodian at the time to make them available on their mutual funds platform because he was one of only two advisors on the platform using them.

To this day he uses DFA funds as the primary investment vehicle for his clients. “We’re built, as solidly as any firm can be built on a strategy of know thy client, do what’s best for the client, asset allocation, diversify as well as possible, put as much of the portfolio as humanly possible into passive investments, which are going to do better two out of three times, if not more, over a five or ten year period, which led me to DFA in the first place.