Outliving their money — it’s retirees’ darkest fear. How to help such clients feel more secure?
Francis Xavier Astorino says the answer often lies in structured products.
That’s what the independent financial advisor discovered almost two years ago, when he began using structured notes to complement the variable annuities with living benefit riders he’d been recommending.
A financial planner for 25 years, Astorino, 49, is that rare FA who takes the time and trouble to create investment solutions that address clients’ emotional issues about money — which can frequently lead them to make giant financial mistakes.
“I’ve always cared deeply about the human condition. I believe that the emotional quotient drives financial decisions more than the intellectual quotient,” says the FA, whose Astorino Financial Group, affiliated with LPL Financial, is in Fairfield, N.J. With a client base of mainly high-net-worth individual investors, the affable Astorino manages more than $100 million in assets. He is the sole producer on a team of seven, which includes wife Deborah, who oversees the insurance department.
For the past four years, Astorino has based his practice chiefly on a financial life-planning model, which thoroughly keys into clients’ backgrounds, values and core beliefs. Though this means spending more time with existing clients, it is time well spent, Astorino says. Last year, he posted a 56 percent rise in gross revenue stemming predominantly from those clients.
“The good news,” the FA says, “is that if you start to care more and more about your existing clients, the financial life-planning process is very fruitful.”
Retiree Emily Schuman, 62, a client in Wayne, N.J., says: “We never made any money until we went with Frank. Our other advisors never met with us. It was as if we didn’t even have a financial advisor. Frank is concerned about our welfare. It’s like he dropped out of heaven.”
But needing expert help to handle some clients’ more serious emotional matters, Astorino brought in a psychologist to work with him. “He does more of the life coaching part, and I do the financial part,” Astorino says. The two share referrals; for example, one client the Ph.D. referred is a widowed recovering alcoholic emerging from depression who needed to sell her home for financial security.
Helping folks “worry less about money” is a fundamental component of Astorino’s client value proposition. That fits in well with structured products, the nation’s fastest growing investment class.
“Clients like the concept of principal protection,” says Astorino, most of whom pay him a 1 percent AUM fee. That rate stays the same when he shifts them from, say, mutual funds into SPs.
Deutsche Bank introduced Astorino to structured products. He became particularly interested in the earned note, which, he says, “basically guarantees principal but enables clients to be fully invested in an index or market. Growth depends on the specific note: If it’s an S&P 500 note, for instance, then your opportunity is as good as the S&P does.”