Name: Janet L. Marcantonio
Position: President of the Rhode Island chapter of The Financial Planning Association. Marcantonio is also a vice president and financial adviser for Merrill Lynch’s private client group in Providence.
Age: 48
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Background: Previously with BankBoston and Hospital Trust private banks for 17 years, before joining Merrill Lynch 2 ? years ago. Became president of the local chapter of the Financial Planning Association in January.
Education: Bachelor’s degree from Trinity University.
Residence: North Kingstown
The Financial Planning Association is dedicated to providing resources for professional financial planners and to educate the public about the process of financial planning. The group has more than 100 members in Rhode Island. On Oct. 12, the state chapter will hold a consumer symposium at Bryant College’s Bello Center.
PBN: The Oct. 12 symposium is a first for the Rhode Island chapter. What
should we expect?
Marcantonio: The purpose is to promote financial planning as a process to help individuals meet their personal financial goals. This is the first time for us. We do a lot of seminars for professionals, but this is a first community-oriented event. The program will run from 9 a.m. to 5 p.m. Sessions at the event will include every discipline, from retirement, taxes, college savings, bonds, etc. We will also have a panel discussion with the officers of our group who will look at what investors should do during these turbulent times.
Do you find it more difficult to get customers or easier with all this turmoil?
It’s much easier now. During most of the 1990s people thought that anything
they touched turned golden in terms of the stock market. You had people throwing
darts to pick stocks and they did well. Nobody thought they needed guidance,
assistance, counseling, much less a truly strategic plan concerning how to invest
to achieve their goals. Now with the market so turbulent people are really turning
to professional help. What they need to do is first figure out what it is they
need and how do we get their arms around what they are going to need. Most people
are coming to us saying they don’t have a clue on how to get there and what
they will truly need at the end.
What do you think are some of the misguided plans being hatched by investors
who are panicking over the stock market?
In the planning process you do a risk assessment of some kind. Two or three years ago when people were flying in the market – with their 401k’s up and their individual investments were up – if you really tried to talk to them about risk, they didn’t know how much they could stomach. It was amazing how cavalier people were and saying they could take a 20-30 percent loss. There is a lot of reassessment going on now, after two years of those types of losses. That’s where we are finding people saying that they can’t sleep at night with all of this loss in principal. If truly we are going to pull back and say growth is not as important as it once was…we can look at preservation of principal…bonds, fixed-income instruments. There have clearly been people who want to get out of the stock market and put it all into fixed income investments, but there is risk there as well, risk of not keeping up with inflation, interest rate risk.
There is a lot of hand holding going on right now with investors. You must
feel like a therapist at times. Is there a lot of anger, despair out there?
We have always been very planning-based, so we can go back to the plan and say this is what you want to accomplish. In general, if you have a good financial planner you know what it is going to take to meet your goals. Every year you will be reassessing your plan. You diffuse a lot of emotions that might be building by having a plan.
We keep hearing these horror stories about people so close to retirement
who are now rethinking their plans because of losses in their portfolio. How
do you work with these people?
If you don’t have the assets and the projection shows you will not have the assets to retire in two or three years because of what the market has done, you need to look at your options. The options include: throw out everything and get overly aggressive with your investments, which is not a wise thing to do in this environment; realize that you will have to save more and work longer; and a lot of people are talking about getting a part-time job after they retire.
I’m sure a financial planner would adjust to a less aggressive portfolio
as retirement approaches. Do you feel sorry for those people who didn’t act
more conservatively and reallocate their funds?
No, I don’t feel too sorry for them. Most people who did that did it without our advice. Personally, we discontinued working with individuals who didn’t want to take the advice and pay attention to the plan we set up. I personally had three situations: two of them were executives with concentrated positions in a stock. Most financial planners would say you don’t want any more than 10-15 percent in any one security. These will typically be executives who have stock options and have been with their companies 10-20 years, and they love it and believe in it, and just can’t separate from it.
What are some popular products that have emerged in recent years?
The 529 (college savings) plans. There’s no question about it. Changes in the tax laws have made them much more attractive, including how you can transfer to different beneficiaries. In Rhode Island, they have been very good as well, because they are state tax exempt as well. It has been a matter of finding the right one for the right person.
Believe it or not, annuities have been popular, fixed-rate annuities. It has to be the right individual. If you asked me three years ago if I would be recommending annuities to people, I would say no. They started changing a lot in recent years, a lot of it was the product, which has gotten better. In the last three years with the market tumbling down that has been real attractive to some people. I’ve always said you must plan to be in an annuity and not need that money for at least 7 to 10 years to truly get the value out of an annuity, because there are additional costs within a variable annuity versus investing just in mutual funds. Anyone who is truly doing it for retirement that’s under 59 1/2, that would work. The fixed rate annuities have been really great within the last year. These are only good for the individuals who are already 59 1/2, because there are no penalties for taking the money out immediately. The interest is always higher than some savings accounts out there. It’s the equivalent to a CD, but tax deferred. It can be a great alternative.
Are you happy with continuing education requirements for financial planners?
You must have in essence 15 hours of continuing education each year, but you have to send in your credits every two years, so it’s 30 hours. You do have to have two of those credits in ethics. Continuing education has been the thrust of our organization. It has been our strength.
What are some of the questions people should ask when picking out a financial
adviser?
First of all, ask them what is their process. You want to see what process they will go through to understand your goals, short and long term. They need to get the foundation down and understand your risk tolerance. Also, how will they be paid. There is a continuing debate within our organization concerning how financial advisers get compensated. I don’t believe there is any right way, but what is important is that it is disclosed and the client understands how they are paying for these services. There are fee-only financial advisers, there are a combination of fees and commission on the different investments you use, or there is asset-based, which is strictly based on a percentage of the investment portfolio. You should ask them about their educational background and their experience. There are also ways to find out if they had any judgments against them. The Certified Financial Planners board of standards is the one to whom people send complaints.
Do you think people make the mistake of only looking at their investments
during the bad times?
A good financial planner will insist that you look at your portfolio and do a review at least annually. Let’s take another look and see if anything has changed personally. If you have a good financial planner he will make you look at it in good times. In bad times, we do not have to do as much nudging, because the clients are right there. However, there are still a lot of people who cannot stand to look and put their heads in the sand. I have a number of clients who don’t even open their statements, because it has been bad news. Those are the ones you want to get together with.
You do your own financial planning. How would you rate yourself?
I am happy with my results. I, like everybody else, did some adjusting to my asset allocations. The hard part, even for a financial planner, is truly reallocating at least once a year. If you are broadly diversified among all different styles of investing within equities, and fixed income investing…when one is not performing it is so tempting to move them. I liken it to five-year-olds playing soccer, they just go to where the ball is and don’t stay spread across the field like they are supposed to.
