Allegheny Interchange - Talking with Robert Stroud, Jr.
How do describe your practice to prospective clients? I’ve been in the financial industry since 1982, originally in mutual funds and then expanding capabilities into the full range of investments and comprehensive financial planning. Basically, I’m a problem solver for clients. They come to me with problems in one form or another. For example, they might want to retire on 80% of their current income, but have not saved enough for that, maybe not even enough for a fraction of that.
I like to do a full financial analysis at the start of any client relationship. In the case of a retirement objective, for example, sometimes we can funnel money from other uses to retirement. We also look at the tax situation, with the aim of reducing tax liabilities to create more for retirement. A few years ago I helped a client find extra assets as a result of an insurer’s conversion to a public company and issuance of stock the insured client was unaware of. Sometime, but rarely, the problem is too much debt or too much spending. Our full analysis helps identify that, letting us develop a strategy to address it.
So you can see that my problem-solving practice centers on doing comprehensive financial planning. When we get a new client, we go through the financial planning process and look at everything. Then we go from there to develop strategies to meet the objectives.
Some of the clients in serious difficulties—there are very few of these—are referrals from the pastor of my church. I do the financial analysis in those cases pro bono. It lets me do something for my community.
Over the years I have developed good alliances with accountants, attorneys and other advisors. That network is often beneficial to clients as I refer them to the right professional to address a particular problem. And of course I’m able to draw on all the planning and other resources of Allegheny Investments on behalf of clients. That lets me do much more than I can do myself.
Who are your clients? How would you describe them? The range is broad. But the majority are 50 or older, and many, maybe 10-15%, are above 70. That is to say, most are close to retirement or in retirement. A minority are in their thirties or forties, and maybe 5% are in their twenties. Some of these younger clients are offspring of older clients, but many have come in independently. Many of my clients are business executives. Although the individual figures vary widely, their net worth, on average, is around $500,000. Average income is around $100,000. But some have far lower, and some far higher, assets and income.
Many of my clients have moved or are moving south in retirement, to places such as Charleston, South Carolina. Some are in Virginia, Texas, Arizona, California and other states. So not all are in Erie, where my office is. I typically visit those out-of-town clients yearly—and of course maintain internet and phone contact throughout the year.
What’s most frequently on clients minds now? In brief, the stock market, the economy, and unemployment. Some even wonder if we are headed toward a situation like Greece’s. Specifically, they are wondering what they should do in the face of the current situation. If they are long-term investors, I advise them to stay the course. If they are short-term investors, I may advise making changes, stepping back from equities, for example, and moving more toward fixed income.
Because of the stock-market slump, some are worried that their projections for retirement are no longer valid. They may have to wait until after age 65 to retire. The uncertain markets and economy have stimulated clients’ interest in some type of guaranteed income. We use variable annuities to meet a portion of that portfolio need, but not all.
There are a number of similarities between the 1980s and today, and I’m finding my experience then has value now.
What brings new clients to you? In a word, referrals—referrals from that network of accountants, attorneys and other professionals I mentioned, from current clients, from the pastor of our church, and from other friends, neighbors and associates. I used to do seminars and “knocking on doors”—to develop my original client base. But I haven’t done those things for 7 or 8 years, at least. Ours is a people-and-relationships business.
Where do you see your practice headed and what are your plans? I’m 51 and never planned to retire. I still don’t, but I’d like to be able to change the balance of my work in the practice, . . . and take more extended vacations, as well. Increasingly, technology allows me to stay in contact with clients regardless of location. I also see putting more and more client money under Allegheny’s investment management. That will let me focus more on client service, counsel and contact.
My wife Vera is a vital part of the practice. She’s the administrator. As she puts it, she “does all the grunt work.” We have been working together since 1982—since I entered t he industry. Indeed, we met in the business. If our 19-year-old son were to come into the practice at some point in the next decade, we would definitely grow it, but we are not planning to add other advisors. We might eventually add an administrative assistant, but that’s all in the way of staff expansion. We run a pretty efficient shop. And we want to keep the practice small and personal.
Contact Bob Stroud at 866.787.6837, or email.
