Fiscal cliff. Debt ceiling. Unemployment. Terrorism. Higher taxes. Inflation. The reasons to worry are endless. Watch any financial news show, and countless “experts” will tell you what they believe is going to happen next and where you should invest now. Confused? The solution may be to find a Registered Investment Adviser.
One of the first things Joseph P. Sarappo III, president/CEO of Retirement Planning Specialists, an independent registered investment advisory firm, in Willow Grove, tells people is “no one has a crystal ball,” and when it comes to investing your money; “always play defense first.” Second, he urges people to establish a working relationship with a fee-based Registered Investment Adviser.
Sarappo cautions that making a profit can be the driving force for some investment advisers. A Registered Investment Adviser has a fiduciary responsibility to each client; with advisers that rely heavily on commissions, sometimes that line becomes blurred. “There is the potential for a conflict of interest if one investment can be recommended over another because it pays a higher commission to the adviser,” he says.
Instead, a focus on fee-based business allows him to keep his clients’ individual needs central, creating an ongoing relationship that helps them meet their goals. Sarappo is a two-time winner of Philadelphia magazine’s Five Star Wealth Manager award, given to less than 7 percent of the wealth managers in the area who have been evaluated by survey participants regarding service, integrity, knowledge, communications, value, success and satisfaction.
Retirement Planning Specialists manages more than $160 million in assets for clients who trust in Sarappo’s experience and the resources of his team. Together they have more than 60 years of combined professional experience and can offer clients access to services such as wills and trusts, accounting, insurance, and bank-and-mortgage services to address their financial needs. Suburban Life spoke with Sarappo about his experience and approach to investing.
Suburban Life: What is a Registered Investment Adviser?
Joseph P. Sarappo III: A Registered Investment Adviser is a firm that charges a fee for the guidance they offer clients. The majority of investment professionals who give themselves the title of “planner” or “manager” make their income from the sale of commission-based products. The rest, including Retirement Planning Specialists, are Registered Investment Advisers that provide unbiased advice to our clients. Clients pay an advisory fee for my financial guidance. There are no fees to establish or terminate the relationship, and products are not sold for the purpose of generating a commission.
SL: How are clients’ investments held?
JS: The investments are held in custody with Fidelity in the client’s own name. Fidelity is the largest custodian of retirement assets in the world. The account statements come directly from Fidelity. I have permission to manage the investments within the account, but I do not have access to the assets themselves. No one but the client can access their money.
SL: You recently established your own investment advisory firm. What advantage does that hold for clients?
JS: A fee-based advisory arrangement offers the purest adviser/client relationship possible. There is only the client, the adviser and the custodian involved—which greatly reduces any potential conflict of interest. I’m not selling a product; my fee is based on my ability to monitor and manage the client’s portfolio, longterm. I’m held to a fiduciary standard; I am required by law to act in the best interest of my clients.
SL: Is that an unusual distinction for your firm to hold?
JS: Being a Registered Investment Adviser isn’t really what distinguishes our firm from many others. The primary thing that does set us apart is that we actively manage our client portfolios. By that, I mean we actually research and hand select each fund that we incorporate into the clients’ accounts. We are asset managers, as opposed to a lot of advisers that are asset gatherers. They charge a fee for their advice and turn over the management of the client’s assets to a third party, who also charges a fee. I’m not saying this is a bad thing to do, but it usually costs the client more in management fees, and it does dilute the relationship by inserting a middleman. I prefer to be more hands on when it comes to managing the portfolios and working with my clients.
SL: What type of clients do you work with?
JS: I work with people who want advice and guidance on how best to protect their nest egg. Most, but not all, want a steady, predictable stream of income in retirement. If someone wants to “play the market” or gamble with their money, we are not a good fit. Slow and steady wins the race.
SL: What do you mean by the phrase “always play defense first”?
JS: By the time they have reached retirement age, people have made most of the money they ever can. Clients say, “It took me 30 to 40 years to save,” and they need it to last the rest of their lives. They can’t earn it back if they lose it. I believe that once you reach that stage and have saved most of what you will ever be able to save, it’s time to play defense. On the other hand, people cannot afford to bury their money in the bank making a half of a percent. I call it “going broke safely.” It is the safe version of losing money.
SL: What do the recent changes to the tax law mean for investors in or near retirement?
JS: These are scary times. People need to determine if their retirement savings are about to go over a cliff by evaluating how the new laws will affect them personally. This is best achieved by consulting an investment adviser and a tax professional that you can trust.
SL: What is the first step to getting started?
JS: My firm offers a 90-day “test drive” with no advisory fees and unlimited advice. This allows prospective clients to experience the level of service we provide and compare our investment program without advisory fees or obligation. During this time they are actually able to see how our strategy differs from the other options available to them. The same 90-day period in the bank might be more like having their money sit in a sock drawer.
SL: What is your business philosophy?
JS: My company logo—four columns—represents what I believe to be the fundamental elements of wealth management: the creation of wealth, the protection of wealth, the enjoyment of wealth and the legacy of wealth.
SL: What sets your services apart?
JS: My team—they are the liaisons between me and the more than 400 clients we serve. John Boshinski, who joined us in 1998, is our client contact manager. He speaks regularly with all of our clients, providing a personal touch to the business we do. Kelly McDonnell is vice president and director of business operations and is responsible for administering our compliance requirements and all other back-office operations. Joanne Noel, has been with the firm for 13 years. As executive assistant, she is responsible for daily office operations. Kieran Boyle and Jackie McColgan are our newest additions. He is a graduate of The Wharton School of Business, and is our research analyst. She is the firm’s bookkeeper. Christopher Sacco is a Chartered Financial Consultant who joined me in 2007 and provides investment advice to a significant number of our clients. I’m also proud of my strategic partners. They provide the expertise to address the specific needs of my clients in every realm from personal and business taxes, long-term care and estate planning to life insurance and bank-and-mortgage services.
SL: How can someone be assured that they are making the right planning decision?
JS: It’s essential to work with an adviser that you trust and one that you believe has your best interest in mind. Our experience, resources and personal commitment can truly make a difference in that respect. As part of the 90-day trial period I mentioned earlier, we perform a comprehensive portfolio analysis. This gives the prospective client a better understanding of the services we offer and what sets our firm apart, allowing them to make a truly informed decision.
Retirement Planning Specialists Inc.
1000 Easton Road
Willow Grove, PA 19090
Phone: 215-657-8600
Website: www.retire-yes.com
Investment advisory services offered through Retirement Planning Specialists, Inc., a registered investment adviser. Securities offered through Comprehensive Asset Management and Servicing, Inc. Member FINRA/SIPC/MSRB. Retirement Planning Specialists, Inc. and Comprehensive Asset Management and Servicing, Inc. are not affiliated.
