Working super-high risk jobs, first responder police officers and firefighters are a fearless lot, to be sure. But in the coronavirus pandemic and accompanying financial mayhem, who is providing these courageous front-line employees with support and assurance for their own needs, especially about their hard-earned retirement savings?
At Serve & Protect Financial, founder Brian McGinnis, a retired 25-year cop, is helping first responder clients stand strong by reducing their stress over finances, as he tells ThinkAdvisor in an interview.
This client niche trusts him because, after all, he’s walked in their shoes. So has the firm’s co-founder, Wendy McGinnis, Brian’s wife, who put in 17 years as a police officer before her retirement.
An FA since 2011, when he opened his independent practice after retiring that year as a deputy sheriff on Florida’s west coast, McGinnis, 62, boasts a highly successful practice built firmly on the trust public safety employees place in him and his advisors, former first responders themselves.
Based in Tampa, the fee-based FA manages assets of about $200 million. Outside Tampa, he does substantial business in Miami, Palm Beach County, Fort Lauderdale and Texas; he has now expanded into Atlanta as well.
In the interview, McGinnis discusses a smart strategic move he made in a number of clients’ portfolios this past January, the effect of which “softened the blow” delivered by the fast and crushing market decline, he says.
Cops and firefighters retire young — age 51 — and have a high divorce rate. McGinnis, whose practice is about 90% retirement accounts, works with these clients to make the right critical retirement-planning choices. For example, the jumbo Florida State Retirement System allows them to choose between a pension and a 401(k) plan.
McGinnis, who started out at McDonnell Douglas (now Boeing) working on the top-secret U.S. Army Apache attack helicopter project, moved on to serving as a police officer for 25 years before fulfilling a longtime dream to step into financial services.
ThinkAdvisor recently interviewed the FA, speaking by phone from Tampa. He described first responders as “a temperamental group” who keep to themselves and deeply trust their own.
Here are excerpts from our interview:
THINKADVISOR: Why are you well suited to advise police officers and firefighters about their money?
BRIAN McGINNIS: First responders are a temperamental group. So there’s a trust factor in working with these clients. As cops or firefighters, we’ve walked in their footsteps. I put on a bulletproof vest for 25 years as a cop. My wife, Wendy [Serve & Protect co-founder], was a cop for 17 years. And several of my advisors are former public safety employees, too.
How have your first responder retirement clients reacted to the pandemic-generated market downturn?
The phone is blowing up with all the people who didn’t [go through the experience of] the [2008-2009] financial crisis. They’re saying, “Wow! My account went down $150,000.” So add that anxiety to going to work every day as a first responder and the regular stressors that go with it.
Are they fearful?
They’re not scared of going to work — but on top of all the other doom and gloom in their lives, it’s this one-off that’s scaring them. They’ve never dealt with it before, and they don’t know how to stop or fix it.
What do these clients want when they call?
They need to know that someone is watching their account and understands what’s happening. They want a bit of pressure taken off themselves. They want someone else to worry because they’ve got enough on their plates.
What do you tell them?
“Let me show you some of the patterns of the past. Do you know of any market downturn where there wasn’t a recovery? A black swan can happen. But black swan events recover.” You hit them with statistics in layman’s terms and be a really good listener.
Did you prepare your clients for a market downturn this year?
In January, we put 20% or 25% of equity positions into a conservative moderate portfolio. So we softened the blow. It had nothing to do with thinking that the coronavirus was coming. It was because this is a presidential election year, and it’s been proven statistically that there’s a lot of volatility in election years.
How did you broach that move with clients?
The market had been pretty solid. If our clients had a 14% or 15% return the previous 18 months, we lowered their expectations and went into a conservative play, mentioning that old saying, “Pigs get eaten; hogs get slaughtered.” In other words, we didn’t want to be overly aggressive.
With what did materialize as a giant decline, have any clients told you they want to go to cash?
Sure. We explain to them that if they’re not in the market, any time there’s a resurgence they won’t be getting that upside. We explain the cause and effect of any type of significant movement, such as going all to cash. But the answer always lies with the client.
Typically, what age are first responders when they retire?
If you start as a cop when you’re 21 and do 30 years, you’re 51 [when eligible for retirement]. If you have a pension, you’re set. One of the great saving graces is deferred comp; there’s no penalty for taking money from it. Also, if they worked a lifetime as a cop or firefighter and have a full pension, the majority will have another income to supplement their pensions and retirement plans.
Cops do fraud investigation at [a bank], or work at Lowe’s three days a week, or work off-duty details like baseball or football games. If you’re a paramedic, you might work in an emergency room three days a week.
You’re expert at the intricacies of the Florida State Retirement System, of which there are about 970,000 members, you say. What are the options for retirement planning for first responders?
While they’re working, they have a choice. They can elect to take a one-time cash buyout and move their pension money to a 401(k) plan. So, instead of adding money to their pension plan every month, they add the same percentage to an investment plan — and now their money is in the market. Probably about 25% of the System’s members choose the investment plan.
What triggered the yen to become a financial advisor?
I had been very interested in the world of finance. Then a guy that worked with me [as a cop] quit and went to work for Raymond James, which is right in our backyard and bigger than life. Another guy I knew also joined Raymond James. They both told me how great it was. At that time, though, I didn’t want to leave [my job] and start another career.
My wife and I were both working as deputy sheriffs. I was a sergeant. We were making good money. We had four children. It was very difficult to walk away from that income when I was 50 years of age and within only a couple of months of being able to retire and [receive] a pension.
But you did retire right around that time. What influenced you to do so?
On July 2, 2011, my deputy — a rookie kid that had been working for me for three years — got killed pursuing someone who was going more than 100 miles an hour and hit him with his car. I had been to dozens of funerals in my time, but this one — this was very rough for me.
Did you leave because of the rookie’s death?
No. But the year before that, my captain was killed by a stolen vehicle. A year before that, a sergeant that worked with me died of pancreatic cancer; and the year before that, the son of one of my deputies that I grew up with drove into the back of a garbage truck at three in the morning and was killed.
I’m so sorry.
Every department goes through things like that. So I’m not saying, “poor me.” But when they’re your friends, it really wears you down. I wanted to get my mind off death and destruction. So I thought, Why not sink into what I love: the world of finance — and I just went after it.
But you weren’t 51 yet. What about that pension?
I was close enough to my 25th year [on the force] that my agency allowed me to retire [and receive it].
Did you join a financial services firm training program?
No. I was an independent from Day 1, when I opened Serve and Protect Financial. I got my master’s degree while I was still a cop and got all the licenses I needed.
How challenging was it to build an advisory business from scratch?
I didn’t have to build my practice because of income. I had income — my pension. And my wife was still working as a police officer [for about five years after S&P launched]. So I had the luxury of building my practice at my own speed and doing it the way I wanted.
Now that you’ve been an FA for nine years, how is it going?
Five years ago, we certainly weren’t doing as well as we are now. I can sell my practice for a very significant amount and probably take it easy for the rest of my life.
Why don’t you?
I’m going after this because I want to affect more people with gains. My main thing is: I want to make a difference to my clients.
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