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A Two-Way Retirement Transition Plan

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James Zimbardi at Allgen Financial Services in Florida is part of a team that is recruiting established advisors from standalone shops as well as from large institutions to act as relationship managers with clients, anchored by an asset-growing strategist who invests for all clients.

With such a plan, Allgen hopes to attract not just the $1 million that a single client might bring in, but the $10 million one advisor might bring in. Since the plan anticipates exponential growth, part of Allgen’s recruiting plan is to bring rainmakers aboard.

The strategy involves a retirement transition plan for established advisors who may be nearing traditional retirement age and wish to scale down their day-to day activities or eventually leave the business they built and retire. They can get a monetary benefit as a stream of income or a structured payout where they still have contact with their old clients if they so choose, Zimbardi says.

Allgen, established in 2003 and rebranded in 2006, offers a succession plan for these advisors, as they are taken under the wings of the Orlando-based company while they keep their relationships with clients for as long as they would like.

The scenario with the older advisors–not those falling out from Wall Street firms–is that they don’t have the operational structure or an equal partner to whom they can transition the business. These advisors may feel they have to sell their book of business, says Zimbardi, but “emotionally it is very hard. We can make it much easier by telling them they can stay in the game at some level but get more free time they are looking for.”

Zimbardi came into the business as a management consultant from MIT, who joined an advisor for larger institutions formerly with the Federal Reserve in New York, along with a CPA, a recruiter, and a portfolio manager. Thus, the team-based approach Allgen uses, with each partner using his professional expertise in the aid of the client as well as the growth of the firm.

Clients are diverse socioeconomically and can be high-net-worth individuals or young families just starting out.

Another characteristic that sets Allgen apart is the principals’ religious bent. While they are multidenominational and do not consider themselves a faith-based firm, they do pray for wisdom in managing assets and attempt to follow Biblical principles on helping clients to keep debt manageable and be charitable toward others.

“We have actually just recruited a recruiter, if you will, that will just focus on recruiting for us,” Zimbardi says. During this period, Allgen is also taking advantage of the advisor transition team provided by its custodian, Schwab Institutional.

Allgen is looking to go nationwide eventually, and in the next year hopes to add four new offices and 24 new advisors in Tampa and South Florida, moving up the east coast to Maine and New Jersey.

Allgen likes to cover its bases with investment tools but does shy away from annuities because it wants to stay strictly fee-based, but will help clients with pre-existing annuities.

Allgen employs Jason Martin as a portfolio manager and investment strategy guru. He is one of only about 600 people in the world who is both a CFP and a chartered market technician (CMT,) a designation given by the Market Technician Association. That allows him to understand the dynamics of entire sectors, which can lead to decisions to over- or underweight a specific sector. But he also uses fundamental analysis, which helps when investing back into a sector, because the best bank fundamentally, for instance, will rise faster and further than its competitors, Martin explains.

Allgen also employs hedge fund techniques in its portfolios, shorting areas of the market that it expects to decline, for example. It also uses risk parameters for investing, so not more than 10% is lost in any one play, and for each play, Martin says, there is a clear and disciplined exit strategy to overcome the emotions–fear and greed–that are always part of the investment equity, he explains.

“I don’t believe in the ‘hope and hold’ strategy. Otherwise, one would have to sometimes come back 120% from a down position, which is very difficult,” he notes. If an account goes down 50%, you have to double it in positive returns just to get back where you started, he adds. “Everyone is going to be wrong sometimes, but our strategy is to be wrong small,” Martin says.

Elizabeth D. Festa is a freelance business writer based in Washington, D.C. She can be reached by e-mail at [email protected].


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