WHAT IS THE ROLE
OF A FINANCIAL ADVISOR?

Goal Planners

This financial planning scenario may appear for a client who is reaching 40 and starting to pull down some decent bucks. She may want one million dollars saved up by age 59, not including the value of her home. This amount, she's concluded, will provide her with adequate income for the rest of her life. We will deal with this type of client in two phases: accumulation and dispersion of assets. The process here is mathematical in nature, involving timing and monthly savings targets.

Speculative Clients

There are plenty of people who are less concerned with an exact age when they can stop working and more focused on taking risks now to make money. This is not as short-sighted as it may seem. We've all heard the phrase "risk and return" and many of those who understand the concept of calculated risk are living in better style as a result. These clients may obtain an advisor to help them study the risks in a potential investment. They may also need the advisor because they can't utilize financial instruments such as options and futures without one. Or, they may simply need advice on putting together a portfolio of stocks which meets their objectives and risk tolerance.

In reading these three scenarios you've probably crossed at least one which sounds familiar to you or somebody you know. Your financial advisor, if properly trained, can do a number of things for you. The first is to expose your current situation in such a way that you can get a good grip on it. There are traditional ways of doing this, such as putting together personal financial statements which you can use to track your progress. Then, there are client-specific methods for those advisors who get a good understanding of a client's psychological process.

Your advisor should also teach you about investment vehicles that exist for different forms of savings. For example, 529 plans exist to save for higher education expenses*. It's named after section 529 of the IRS tax code and allows for distributions for qualified higher education expenses to be exempt from federal income tax. This provides a nice incentive for using the plan rather than accumulating funds elsewhere. The 529 plan gained in popularity after the passage of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA). Other examples of beneficial savings vehicles include IRA's for tax-deferred savings, and 401k plans for corporate workers looking to reduce their taxable income base and, depending on the plan, possibly catch an employer match. However, not everyone knows that these different vehicles exist and knows how to properly utilize them. Your planner can help expose these benefits for you.

Your financial planner can also administer a plan for specific goals. This process goes hand in hand with creating and maintaining a budget. If you need $30,000 for a car, and you have $10,000 today plus your future earnings potential, you can figure out with excellent accuracy a savings pattern which will make this possible. Perhaps you'll figure out that $2,000 saved annually for 7 years plus accrued interest will be sufficient. If you divide this cost monthly, this difficult expense will run you only about $175 per month. That isn't quite as scary, is it?

Further, your financial advisor may have a specialty. Some advisors like to hone in on certain demographics, such as the high net-worth market or clients in retirement. Others will specialize in an investment product such as insurance needs. In the following chapter, we will discuss some of the different types of financial professionals and how they get paid. This will give you a better understanding of the financial planning process and perhaps lead you to becoming a more knowledgeable consumer.

I'd like to briefly return to my original point that financial advisors are not just for the wealthy. Nowadays, personal finance issues can be as complicated for the middle class as they are for the wealthy. Often a simple flat-fee can be enough to retain the sort of financial plan which can dramatically improve your personal financial situation. Try to keep an open mind, and find a planner who will sit down with you and develop saving, spending, and investment plans. You may find it the most valuable few dollars you will ever spend.

Scharf also emphasizes the importance of truly listening to the particulars of each client's personal situation, and cites education as a crucial factor in his company's effectiveness.

"We educate clients about the entire investment process and not just about our own products and services," he says. When a client approaches Scharf Group for the first time, they are introduced to a team of staff members for a discussion of their needs and how the Group's services can best assist them in reaching their goals. Though this initial consultation is complementary, Scharf is insistent about its value. "We need to see if there is a fit," he explains. "Will the client benefit from us and vice versa? We're looking for a win-win relationship."

Scharf is passionate about what he does, and thrives on conveying that enthusiasm to others. He finds personal motivation and inspiration in helping people achieve their financial goals, and notes "When you love what you do, even working is time for yourself." That kind of enthusiasm pays off, and 99% of Scharf Group's clients come to them by way of referral.

Rena Margulies, vice president of the mortgage division, reiterates Scharf's sentiments. "There's a great camaraderie at Scharf Group," she notes. "It's a very team-oriented atmosphere, and it's a pleasure to be part of that. And when I'm productive and happy, the people who benefit are the clients."

She also refers to another of Scharf Group's points of pride — their devotion to staying current with the latest information, as well as with their clients' evolving needs. "There's tremendous technology behind us here," says Margulies. "Databases, programs — [Scharf] has always been one to invest in those things. I used to do more things the old-fashioned way, but the new technology has made my work even more productive and effective." Scharf Group's unrivaled technological support system includes the revolutionary BetaVest™ CASE Management System, and they have recently overhauled their company website to better educate and support current and prospective clients.

In exchange for their unsurpassed expertise and commitment to service, Scharf asks for the respect and trust of his clients "The media too often misleads people into thinking that anyone can and should handle their own finances, but this is not always the case," he points out. "There are many people who simply don't have the time or resources to do it all themselves. This is where we come in." Client involvement and education are as essential to money management as they are, for example, to healthcare. But just as people don't teach themselves how to be doctors, there is ultimately no substitute for the kind of professional guidance provided by Scharf Group's years of extensive experience and accomplishment.

Jason Brown, vice president of Prudential Financial, an investment management company, has frequent dealings with Scharf Group. He cites the company's "holistic approach," and points out that their enormous range of services simply doesn't exist anywhere else today. "There's no other firm that does all that they do for their clients," he says. "I work with 500 advisors, and Scharf Group is leaps and bounds ahead of the rest."