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