Managing Baby Boomer Money

By Hannah Wallace August 31, 2005

When investment professionals Wayne Dictor and Stephen Martin meet with clients, it isn't for a quick chat about stock portfolios over coffee. Dictor and Martin have created a novel new way to satisfy the wealthy, especially those discerning and fussy baby boomers. They encourage their clients to think of themselves as a corporation, and they hold annual board meetings to help brainstorm the "company's" future-a catered lunch included-to which the client's accountant, attorneys, trust officials and grown children are invited. In the Dictor & Martin model, the client is the chief executive of the company, and Dictor and Martin are the chief financial officers who do the work of planning for the client's future while the client goes about enjoying his present.

Wealth management today is about a lot more than handling and maximizing assets; for high-ticket clients like those of Sarasota-based Dictor & Martin, it's about finding financial professionals who can handle the bulky accouterments of today's wealthy boomer retiree: the yachts, the second homes, the grandchildren's trust funds and possibly a retaining interest in the old business.

While such retirees certainly existed in previous generations, investment firms and banks are stepping up to meet the demands of the baby boomers now massed at the forefront of retirement, who are often more demanding, better educated and more likely to live longer than previous generations of retirees. Kenneth J. Garcia of Edward Jones Investments in Sarasota, for example, follows company policy of knocking on the doors of every neighbor within a two-mile radius of his downtown office. Whether or not they become a client, he feels the face-to-face interaction-even though he may be perceived as a door-to-door salesman-is important. Other managers become so involved in clients' lives, they are practically members of the family.

They're also going to be in the thick of the largest transfer of wealth in history, approximately $41 trillion, according to the Boston College Center on Wealth and Philanthropy. While many boomers handle their own financial affairs, aided by the wealth of information and do-it-yourself kits out there, many who were burned by the technology bubble in the 1990s are less gung-ho about going it on their own. As usual with boomers, who tend to use every resource available to get the best and brightest, whether it's to find the best schools for their now-grown children or the best doctor for rotator-cuff surgery, they seek the help of professionals with creative approaches who can help them maintain their purchasing power well into the future.

"To retire at 50, 55, and do nothing but grow tomatoes for 40 years is not exciting for someone who has had the thrill of growing a successful business," says Martin.

Martin says the firm's clients (who must have a minimum of $1 million to be taken on) see their retirement as the start of a new career in managing their wealth. "Today, 60 is the beginning of 30 additional years of life," says Dictor. "Successful boomers have CFOs. They realize as they phase into retirement that they are running a financial corporation: taking their wealth and letting it bring them through the next 30 years of retirement."

Indeed, professionalism is a hallmark of the boomers, not just in their business affairs, but in the way they approach all aspects of their money management.

"The investor today is more sophisticated and more multidimensional," says Mark McClintock, regional managing director of personal asset management for SunTrust Banks, Inc. "They are beyond the typical asset classes of stocks and bonds."

In response, SunTrust now offers financial planning, insurance and hedge funds, and has departments that handle endowments and foundations, liquidity management and capital markets for people who want to take a business public, says McClintock. This type of one-stop shopping is something boomers have come to expect in most aspects of life. High-ticket clients appreciate having one point person on their financial team who can handle multiple matters and coordinate with various other professionals, and they like driving to only one building to get their business done.

At Harris Bank, for example, someone looking to take their business public can come into the bank and find not only professionals to manage the financial aspects of the deal, but also advice from mortgage experts as well as a real estate team to analyze the physical office space.

"It's a mindset that's actually changing here," says Jack Ablin, chief investment officer for Harris Bank. "We recognize now that business owners view everything they own as one big whole. We are looking at integrating the client's personal business with their investment portfolio. More and more, people are looking at assets as investments: the second homes, the art collections, what used to be hobbies. Banks were terrible about additional needs of clients like that, but two years ago, we recognized the need to present ourselves as one united front. We gained ground with clientele because they think that way."

Mona Zapper, vice president and senior portfolio manager of Harris Bank, says the bank looks at clients' personal portfolios as well as their business ones, even if they are only handling one or the other, to make sure they are diversified enough to prevent losses. Consultants from Sotheby's and California-based Butterfield & Butterfield offer Harris clients advice on how to assemble an art collection and teach collection strategies; one client even gets help with his collection of antique cars. The bank also keeps experts on hand to advise clients on everything from real estate-the new big thing in the investment portfolio-to philanthropy, from an in-house philanthropy expert. According to Boston's Social Welfare Institute, $6 trillion of the $41 trillion will go to charity, and the new generation of givers tends to be more involved and cognizant of how effective and significant their contributions are.

"A generation ago, I think retirees were just as charity-minded, but more likely to write a one-time check," says Ablin. "But with this generation of clients, they want to make sense of their philanthropic activities. They are trying to leverage the impact they have with their charitable contributions; they're making charitable game plans. They want to maximize the social impact they have with their donations. I'm not sure they're more generous, but they're doing things in a more organized way."

For high-ticket clients, boutique wealth managers also offer something the hoi polloi don't always get: the personal touch. Dictor and Martin, for example, send clients' grandchildren coloring books on birthdays.

Clients don't just call financial planner Paul Gesko to manage portfolios, help transfer their wealth to their children or set up retirement plans. They call Gesko when they want advice about what car to buy, whom to vote for in an election, or simply to invite him to their grandson's bar mitzvah. Gesko is opening a Sarasota office of his Buffalo-based Miller Gesko, a firm he co-founded in 1969 that manages the portfolios of a select 65 families in 17 states.

Gesko has made a business out of delivering personal services in addition to financial advice. He has helped clients through divorces, advised grandchildren about the conditions of their trust funds, supported families who have a member in rehab programs, and kept an eye on a sick child for a client who asked him to do so on her deathbed. He's had five generations of one family under his care at one time, and has often assumed the role of surrogate parent to the younger ones. Sometimes, Gesko will get a call in the middle of the night from a client who is going into the hospital and wants to be assured his affairs are in order. And then there was the client Gesko flew to San Francisco to meet, who ended up flying him to Hawaii to discuss finances and life. Since then, they've gone three times.

"We've done a lot of hand holding," says Gesko, "We create relationships, and the relationships become personal and become friendships."

Over his 43 years in the business, Gesko has noticed a lot about people and money. Boomers have more experience with it than their parents did, for example. And people who earn their money tend to be more cautious than those who inherit it, though those who earn it also tend to also be more generous to charities.

Regardless of the level of income, Gesko says if you don't grow your portfolio, even with modest inflation you stand to lose a significant portion of what you have. For someone with a couple of millions to shepherd into the next generation, the services of an investment manager may be the answer between growing the art collection and selling it out of necessity. And when the person handling your money can also figure out how to get you the best care for a hospital treatment or buy the perfect vacation home, so much the better.

"The types of things we do for clients make them dependent on us, and we take so much responsibility for not just their financial, but also their personal lives," says Gesko. "We want to know as much about the client as he knows about himself."

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