Wealth 101
01 Oct 2019
Financial planning and advice on growing your wealth
By Jonathan Scott
An old joke tells of a doctor who is called to the bedside of a dying man. The man is surrounded by his children. One by one, the old man takes their hands and says to each, “I want you to take my beach condos” and, “I want you to have the luxury apartments,” and, “You can have the house with the pool.”
After the man has breathed his last, the doctor turns to the bereaved and admits, “I didn't know your father was so rich.”
“Rich?” one replied. “No way. Our old man just owned a home cleaning business.”
When we finish laughing, some of us might wonder what we should be doing in our own lives, so someday we can take the hands of our children and bequeath them something more than a chance to work even harder. Many people wonder when it's time to get financial advice. And how in the world does someone choose from the variety of advisors available?
Getting Started
A recent article in US News & World Report quotes a certified financial planner as saying, “Once someone is to the point that they have stable and steady income and have the ability to save at least 20 percent of their annual income, it might be time to consider a financial advisor.”
Craig Stokes is such an advisor. He works for the Edward Jones financial services company, which offers its client basically three account options. With their Transactional Account, you have the most flexibility to manage investments, Edward Jones is compensated by commissions on buying and selling, plus you might be liable for what are called “internal expenses” that are charged by some investments.
This kind of account is held to what is called a “suitability standard.” Brokers who follow the suitability standard are required to help their clients invest in ways that are, in the minimum, suitable to them.
The other term that you hear in the industry is “fiduciary standard.” That means your financial advisor, or the firm you are working with, has a legal obligation to put your interests above their own. In other words, the advisor must choose an investment that he or she determines is in your best interests, even if the firm would make more commission from a different investment.
Stokes can also guide his clients to accounts that are held to fiduciary standards, for which standard fees apply, usually a set percentage of the total amount of the portfolio. These professionally guided accounts have minimum amounts for a portfolio from $5,000 to $50,000.
Financial Planning and Growing your Wealth
Scott Kittrell works for Parsec Financial in Southern Pines. “The name financial advisor gets thrown around,” he says, “and it means a lot of different things to different people. The most notable difference relates to an advisor's legal obligation to clients.
“It's important to understand specifically what you want from an advisor. If it is merely to direct existing investments, financial planning may not be important to you. However if you want to address your broader financial life and understand how individual decisions influence your ability to meet your long-term financial goals, then comprehensive financial planning may be a better option.”
Advisors such as Kittrell work with clients building wealth as well as clients who have accumulated multi-million dollar portfolios. Before selecting an advisor, Kittrell recommends someone seek out referrals from trusted sources and check potential advisors' backgrounds at such sites as brokercheck.finra.org or adviserinfo.sec.gov.
Estate Planning is for the young and the old
Attorney Patricia Niebauer specializes in Estate Planning and Administration as a partner with the firm Robbins, May & Rich, LLP in Pinehurst. “I work with young and older families,” she says, “to help them plan for what they want to happen in their lives, not only if they were to become incapacitated, but also how they want to leave their assets after death—whether it be to their children or charities or friends. I walk with them through that process to make sure that what they want to happen is accomplished. Often that involves looking at how their assets are held and legally titled.”
Niebauer is quick to point out that it's not only the super-wealthy who need to think about planning. Often the word “estate” conjures images of stately family mansions, but most of us accrue some kind of assets during our lives that are considered estates. “No matter a person’s financial situation,” she says, “with a proper estate plan, the transfer of assets at the time of death can be handled efficiently and potentially without having to probate the estate.” Probate is a process that is supervised by a court that determines the validity of a will and settles disputes over who is to inherit and how assets will be distributed.
Wealth Management and Trusts
Sometimes getting the right advice may be found as close as your local bank. Russell Sugg's title at First Bank is Wealth Advisor. A law graduate of Wake Forest, he was an insurance attorney until he joined Wachovia Bank in 2001 where he handled large family trust relationships. He began working with First Bank when it relocated its corporate headquarters to Southern Pines and was able to bring his expertise to advise First Bank’s high net worth clients. Sugg looks at their goals and objectives, risk tolerance, as well as income and growth needs in constructing customized portfolios made up of individual stocks and bonds.
Sugg’s clients are not always individuals or couples who retire with assets that need skilled management. Often they are families where members may have different or overlapping interests. Sometimes these include special needs children, individuals with addictions or other factors that could influence their abilities to properly manage money. The need for a trust may figure into the asset management, and Sugg brings both wealth management capabilities to First Bank.
Like Patricia Niebauer, Sugg’s skill as a lawyer can be an invaluable aid when it comes to the complexity of handling generational relationships and trusts. A deep understanding of wealth management usually requires a thorough knowledge of law, insurance and trusts.
One thing you will hear from virtually all financial advisors is to plan ahead, save what you can, and get professional advice when you're able. That way, whether the unexpected occurs, or the expected day of retirement arrives, you can live the way you choose, not the way you have to.
Listening to Life Stories
A recipe for a financial planner’s success
Strolling down shady SW Broad Street in Southern Pines, you might be surprised that inside the quaint brick building just past the aroma of the bakery are branch offices of a wealth management firm that handles $2.7 billion in assets as of June 30, 2019.
Parsec Financial is North Carolina born and bred. It was founded in Asheville in 1980 by Bart Boyer. Boyer was committed to the idea that fee-based financial advice would prove to be the best model for both the company and its clients. Parsec operates under the fiduciary standard where advisors are required to put clients' interests ahead of their own. This model has paid off for the firm; it now has six offices across the state.
In 2013 Parsec opened its Sandhills branch in Southern Pines in that quaint building where once a doctor had his practice. It’s only fitting that the office has a history of improving resident’s health – physical, mental and financial.
Parsec may boast of the size of assets it manages, but Financial Advisor Scott Kittrell likes to talk about the human side of the business. “Our advisors have a smaller number of clients than most,” he said. “That means we can really spend time with our clients to get to know them. For a small community, it’s very cosmopolitan so the stories clients tell me are just fascinating.”
For that very reason, Kittrell is a lifelong fan of the Sandhills area. He has lived in Pinehurst since 2000 having spent the eight years before that in Fayetteville and Sanford. “I’m committed to this community. Even when my career took me out of town, I chose to commute instead of moving my family.”
He noted that Pinehurst and Southern Pines are unique in a lot of ways. “It is not a typical Southern town in that many, if not most, of the residents weren’t born here,” he said. “Whether they have retired or relocated, the people here have chosen to be a part of this community.”
Thanks to the many diverse backgrounds he encounters, Kittrell gets to do a lot of listening. And he views that as the best part of his job. Kittrell joined Parsec to manage the Southern Pines office in 2017.
“I chose to work for Parsec because Parsec has the platform and the ideals that I believe represent the best way to deliver true financial planning to the client.”
Before joining Parsec, Kittrell was Managing Director of CommunityOne Wealth, a division of CommunityOne Bank. His professional experience includes roles in both investment management and banking with Interstate/Johnson-Lane and Wachovia Bank.
“I’d like to think that I’ve earned enough trust and respect of the community for people to feel comfortable sharing their hopes and dreams and allowing me to help them make smart financial decisions,” he said. “That trust and relationship really mean a lot to me.”
Kittrell noted that for some their stories come easy, whereas for others it may take some patience. Either way, it’s important to understand a person’s motivations, ideals and priorities to customize the best financial plan to fit their needs.
“Everybody is unique and so is their life journey,” Kittrell said. “As a result, any financial planning should be customized and an ongoing process. A financial plan is a living document and must adapt to change; you can’t just stick it on the shelf.”
Prior to starting at Parsec, Kittrell took some time away from his career to assist his sister in serving as a primary caregiver to their mother while she was battling terminal cancer.
“Caregiving helped me to recognize the value and reward in serving others. It’s about providing the structure, resources and advice to help someone figure out exactly where they want to go and the best way to get there.”
Whether you are a retired couple that recently moved into town or a business owner thinking about selling your business, Kittrell’s door on SW Broad St is always open and he’s ready to hear your story.
LOCALLY-FOCUSED FIRST BANK
A thoughtful employee once proposed an answer. “I guess because the community needed it.”
What was once an institution intended to provide loans to farmers and other folks in struggling North Carolina rural areas, is now the largest community bank in the state. There have been enormous challenges to grow a financial institution over the last 84 years. But the administrators of First Bank continually gave themselves an additional challenge—to maintain the locally-focused attitude of the founders, or as Mayer says, “to not forget where we came from.”
“We genuinely care about what we do and whom we do it for. We support our communities with our time, talent, and treasury, and the company does all it can to reinforce those commitments and help our associates do that.”
One service that First Bank offers is Wealth Management. The Bank has a team of financial advisors who work on behalf of customers to ensure their assets grow and work to fulfill their specific long-term goals.
Mayer is also proud of their recent “Dream It, Do It” campaign. “We started by pledging $100,000, which we would give people to help them realize their dreams, and $10,000 for each of the nonprofits that helped us select the recipients.” When the bank solicited customers to send in their “dreams,” there were over 3,300 responses from across the Carolinas.
“One of the most moving stories to come out of the program,” says Mayer, “is of a woman living in a small town with a severely autistic child. She always wanted a service dog for the child. Those are highly trained and expensive. We arranged for her to get one. That day, we changed someone's life.”
A video of that day, as well as stories of First Bank's impact on the communities it serves can be found at
localfirstbank.com/stories.
