Mid­dle-Class Mil­lion­aires

Fur­lotte’s fo­cused ap­proach to wealth man­age­ment keeps a tar­geted de­mo­graphic of af­flu­ent clients at ease.

Insurance - - AGENCY - by Elizabeth Fuhrman

Eric James Fur­lotte, a three-year MDRT mem­ber from Farm­ing­ton Hills, Michi­gan, pro­vides in­de­pen­dent fee-based fi­nan­cial plan­ning and in­vest­ment man­age­ment ser­vices to a tar­geted de­mo­graphic of af­flu­ent house­holds. His clients fall into the top 10 per­cent of wealth and wage earn­ers within the coun­try.

“I re­fer to them as mid­dle-class mil­lion­aires,” Fur­lotte said, ex­plain­ing they typ­i­cally have a six­fig­ure in­come and re­tire with a seven-fig­ure net worth, but they still iden­tify them­selves with their mid­dle-class up­bring­ing.

About 12 years ago, Fur­lotte made a con­scious de­ci­sion to not be all things to all peo­ple. His firm, Fur­lotte & As­so­ci­ates, spe­cialises in fee-based re­tire­ment plan­ning and in­vest­ment man­age­ment for af­flu­ent house­holds.

Be­havioural stud­ies show that emo­tions lead many in­vestors to buy at mar­ket peaks and sit on the side­lines dur­ing mar­ket lows and the fol­low­ing run-up. This has a dec­i­mat­ing im­pact on in­vestor re­turns over time.

“It’s OK to tell some­one, ‘I un­der­stand what you are look­ing for, but I don’t think I’m go­ing to be the right fit,’” Fur­lotte said. “When this hap­pens, I’m still usu­ally able to find a way to pro­vide some value dur­ing our time to­gether.”

Re­spon­si­bil­ity Mind­set

He sees his pri­mary role as a pri­vate wealth ad­vi­sor to help his clients grow, utilise, pro­tect and ul­ti­mately pass on their wealth in an or­gan­ised and well-thought-out way. Most of Fur­lotte’s clients ini­tially hire him in their 50s and 60s, when they are most in­ter­ested in mak­ing sure they are on the right path to­ward a sus­tain­able re­tire­ment.

This top 10 per­cent de­mo­graphic is pop­u­lated by a di­verse mix­ture of pro­fes­sions, such as engi­neers, at­tor­neys, physi­cians, teach­ers, po­lice of­fi­cers, fire­fight­ers, ex­ec­u­tives, sales pro­fes­sion­als and busi­ness own­ers. The com­mon trait among them is what Fur­lotte refers to as a re­spon­si­bil­ity mind­set.

“They re­alise they can­not rely on the lot­tery, or a government bailout, or any­thing else but their own hard work and smart de­ci­sions,” Fur­lotte ex­plained. “They hire me to make sure they are mak­ing the best de­ci­sions that are in line with their goals and val­ues. It’s quite an ac­com­plish­ment to be good enough at some­thing to break into the top 10 per­cent of wage earn­ers in our so­ci­ety. It’s an even big­ger ac­com­plish­ment to en­trench your­self in the top 10 per­cent of wealth.”

Peace of Mind

Fur­lotte has been work­ing with this mar­ket for the past 14 years. Dur­ing the 1990s, fi­nan­cial in­for­ma­tion was cheap and abun­dant via the In­ter­net, but Fur­lotte thought the over­whelm­ing amount of in­for­ma­tion avail­able was not lead­ing to bet­ter de­ci­sion mak­ing. In fact, he no­ticed it was more likely to lead to no de­ci­sion through in­for­ma­tion paral­y­sis.

“I found that many peo­ple were look­ing for some­one with the knowl­edge and ex­pe­ri­ence nec­es­sary to help them or­gan­ise things into a wellthought-out plan,” Fur­lotte said.

A com­mon con­cern of Fur­lotte’s clients is run­ning out of money in re­tire­ment. His clients want to be able to travel, help out their kids and grand­kids, and be pre­pared for any large spend­ing needs that arise.

I found that many peo­ple were look­ing for some­one with the knowl­edge and ex­pe­ri­ence nec­es­sary to help them or­gan­ise things into a wellthought-out plan

“Peace of mind comes from your life­style be­ing pro­vided by your wealth and not by your in­come,” Fur­lotte said. “My clients hire me to get them to that place and make sure they are able to stay there.”

Fur­lotte & As­so­ci­ates reg­u­larly per­form stress tests on clients’ port­fo­lios to see how a po­ten­tial mar­ket drop could af­fect their abil­ity to stay on track. “Each one of my clients un­der­stands where they are on their path to­ward fi­nan­cial in­de­pen­dence and knows what they need to do each year to stay on there,” Fur­lotte said.

Re­fer­ral Mind­set

About 80 per­cent of Fur­lotte’s busi­ness fits into the pre-re­tire­ment or re­cently re­tired de­mo­graphic, with the re­main­der coming from multi-gen­er­a­tional clients.

“An in­creas­ing trend dur­ing the past sev­eral years has been for my clients to ask me to work with their adult chil­dren — some­times as early as col­lege grad­u­a­tion,” Fur­lotte said. “One of the fam­i­lies I work with con­sists of seven house­holds span­ning four gen­er­a­tions and sev­eral mil­lion dol­lars of wealth.”

Most new clients come in as a re­fer­ral from an ex­ist­ing client. In ad­di­tion, Fur­lotte or­gan­ises sev­eral events through­out the year, such as the­atre and sports out­ings, de­signed around the in­ter­ests of his clients. Th­ese events pro­vide an op­por­tu­nity for clients to in­tro­duce Fur­lotte to friends and fam­ily in a so­cial and in­for­mal set­ting.

Meet­ing Clients’ Needs

Fur­lotte is a big be­liever in as­set al­lo­ca­tion, but thinks one of its fun­da­men­tal flaws is that mod­ern port­fo­lio the­ory is based on the as­sump­tion that

hu­man be­ings be­have ra­tio­nally dur­ing times of cri­sis.

“We don’t,” he said. “Be­havioural stud­ies show that emo­tions lead many in­vestors to buy at mar­ket peaks and sit on the side­lines dur­ing mar­ket lows and the fol­low­ing runup. This has a dec­i­mat­ing im­pact on in­vestor re­turns over time. I spend a lot of time ed­u­cat­ing clients about this dur­ing times of rel­a­tive calm so that we be­have ra­tio­nally dur­ing the scari­est of fi­nan­cial cli­mates. This has helped my clients’ san­ity and per­for­mance dur­ing the past decade.”

Whether it is a unique niche or a broader tar­get mar­ket, Fur­lotte sug­gests find­ing out what clients’ plea­sure and pain points are.

“Since my fo­cus is on re­tire­ment plan­ning and man­ag­ing wealth, I ask about their pre­vi­ous in­vest­ment man­age­ment ex­pe­ri­ence,” he said. “If they have done things on their own up un­til now, what has caused them to seek pro­fes­sional man­age­ment now? If they are chang­ing ad­vi­sors, what did they like and dis­like about their pre­vi­ous ad­vi­sor? Clients will tell you what they want to ac­com­plish and what they want to avoid. They rely on our ex­pe­ri­ence and knowl­edge to help them de­velop and work a plan to get them there.”

Fur­lotte en­sures he is in the po­si­tion to meet his clients’ chang­ing needs by in­creas­ing his knowl­edge through net­work­ing with other pro­fes­sion­als and read­ing in­dus­try pub­li­ca­tions. A three-time qual­i­fier of MDRT’s high­est pro­duc­tion level, he at­tended his first Top of the Ta­ble An­nual Meet­ing in 2010 in Naples, Florida. “What im­me­di­ately struck me is that ev­ery at­tendee I met was an ex­pert within their par­tic­u­lar niche of the vast fi­nan­cial ser­vices in­dus­try,” he said. “MDRT and Top of the Ta­ble are help­ing me be­come a bet­ter wealth ad­vi­sor for the fam­i­lies I work with.” This ar­ti­cle was reprinted with per­mis­sion from the Mil­lion Dol­lar Round Ta­ble’s Round the Ta­ble mag­a­zine. For more in­for­ma­tion about MDRT mem­ber­ship, visit www.join­m­drt.org.

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