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Reaching the Summit

Several of those who hiked Mount Washington as part of a team-building exercise at St. Germain Investments pose for a photo at the summit.

For a good part of its 95-year existence, St. Germain Investment Management has been focused on the last two words in its name. But over the years, it has evolved into a financial-planning company that will take a check and invest it, but also help clients with everything from devising a plan to pay for college to determining when someone can retire.

Mike Matty was dressed casually on this Friday, which was unusual, because, in general, he doesn’t do casual Friday — or casual any other day, for that matter.

But there was a reason.

In a few hours, he would be heading up to Mount Washington in the Presidential Range to do some advance work — such as collecting the keys for the rented condos and other logistical matters— for a rather unique team-building exercise, with the emphasis squarely on exercise.

“A lot of those rules of thumb came about decades ago, back when there were traditional pensions and people retired at 65. And if you did retire at 65, you didn’t have 15 years worth of traveling ability in front of you because you didn’t have artificial knees and hips and stents; all that has changed.”

Indeed, as he did last year, Matty, a seasoned climber who has accomplished the rare feat of summiting the highest mountain on every continent, would be leading a team of employees at St. Germain Investments, spouses, and even a few children on a hike up Mount Washington, the 6,288-foot peak — the highest in the Northeast — famous for everything from its cog railway to its notorious, quickly changing weather.

“You’re not starting at zero, you’re starting at 2,600 feet or so, but it’s still a good hike up, and it’s a great challenge for people,” said Matty, president of St. German, who could have used those same words (and does) to describe the task of financial planning. “There are a lot of people here who have never done anything like this.”

Matty told BusinessWest that, while it might seem natural that he would take the point, as they say, in this climb and lead his team up the mountain from the front, he would instead be “leading from behind,” as he put it in an e-mail to the roughly 30 people, representing all age groups, who would be joining him.

“I’m back there cheering on the people who are having a hard time and struggling a bit and feeling that maybe they should turn around or that they’re going too slow and holding everyone up,” he said, adding that the first mile or so “isn’t bad,” then the next mile is very steep, then there’s another generally flat portion, and then it gets quite steep again.

Listening to this, one could, and should, see myriad parallels between what Matty was doing for his employees on the Mount Washington climb and what his team at St. Germain does for clients on a daily basis — provide advice and encouragement, help others take advantage of accumulated knowledge and experience, and yes, assess risk.

“It is a lot like financial planning and investing,” he said. “You set a goal and a path for getting there. And if conditions aren’t right, you pull back and turn around; it’s all about risk assessment and doing everything you can to be ready. That’s what we help people do.”

These thoughts sum up what has been a significant change at St. Germain, one that has taken place over the past few decades or so. In the past, the company was strictly as asset manager, while today it is engaged in virtually every kind of financial planning, right down to the well-attended seminar on Medicare planning that it staged recently.

“Years ago, this was an asset-management business,” he explained. “It was really just ‘come in, give us a check, and we’re going to manage the assets for you.’ Today, we’re much more actively involved with the financial-planning side of it.”

Elaborating, he said the company is now involved with helping clients decide when they can retire, when they should start taking Social Security, whether they can afford a vacation home, whether they should invest in municipal bonds in the state they intend to move to, and myriad other aspects of financial planning for today and especially tomorrow.

Mike Matty says climbing a mountain is a lot like financial planning — they both involve setting goals, devising strategies for meeting them, and assessing risk.

It’s a sea change of sorts, and the evolutionary process continues — the company recently hired someone to exclusively develop financial plans for clients through the use of acquired software, a hire that speaks volumes about how the company has grown and evolved in recent years, said Matty.

For this issue and its focus on financial planning, BusinessWest talked at length with Matty about how the company serves clients on perhaps the most important climb of their lives, and how it works with them to help ensure that achieving financial security isn’t necessarily an uphill climb.

Upward Mobility

Like anyone who has climbed Mount Washington a number of times, Matty has his own large supply of stories about the peak — and especially about its famous weather and measured wind speeds well north of 100 miles per hour.

“I have a video that I took two years ago,” he said. “I’m literally standing on top of Mount Washington; there’s a 50-mile-per-hour wind, a few inches of snow on the ground, there’s snow blowing by me — and it’s September 1st!”

That anecdote provides yet another parallel between climbing a mountain and achieving financial security for the long term, said Matty, adding that life, much like the weather on Mount Washington, can change quickly and, quite often, unexpectedly.

Thus, the very best strategy is to have a good plan and be prepared — for anything.

And that, in a nutshell, is what St. Germain Investments has been helping its clients do for nearly a century now — the company is marking its 95th anniversary this year.

Much has changed since 1924, as Matty noted, and even over the past few decades, as the company’s focus has shifted from simply managing money to assisting clients with the myriad aspects of financial planning — from determining how college can and should be paid for (often, several generations of a family share the load these days), to determining when to sell the family business, to deciphering how Medicare works, hence that aforementioned seminar.

Which was not your run-of-mill Medicare seminar, such as the one you might see at the local senior center, said Matty, but rather one led by experts who can speak to questions and concerns raised by the typical St. Germain client, a couple or individual who has managed to accumulate some assets and save successfully for retirement.

That seminar, as well as the recently hired financial planner — who was among those on the hike to the top of Mount Washington — are some of the many obvious indications of change and growth at the firm, said Matty, who said there are a number of ways to measure success at St. Germain.

He listed such things as profound growth in assets under management (the number is now just over $1.5 billion) to similarly profound growth in the workforce — there are now 23 employees. There’s also a new satellite office in Lenox with its own brand (October Mountain Financial Advisors) and consistent presence — four years in a row — on the FT (Financial Times) 300 list of the top financial advisors in the country.

“There’s a lot of stuff out there you can get named to because you paid 50 bucks — this list isn’t one of them,” he said, adding that there is a very rigorous set of criteria that must be met to be so honored and there are only a few firms in this region on that list.

But the best measure of success is clients’ ability to successfully navigate their climb to financial security, he said, adding that the firm helps them accomplish this by first getting to know them and their specific circumstances, and then leading from behind, if you will, by providing guidance and working in what amounts to a true partnership with the client.

As Matty noted, this is a long way from the days of taking a check and investing the amount written on it.

Peak Performance

As he talked about financial planning and how his company goes about serving clients, Matty noted there are, or were, several rules of thumb, if you will, in this business, regarding everything from life expectancy to retirement age, to the percentage of money in one’s portfolio that should be invested in stocks.

He believes most of them are obsolete and that, in general, as people live longer and are able to do more in retirement than they were a generation or two ago, there are no more rules.

“A lot of those rules of thumb came about decades ago, back when there were traditional pensions and people retired at 65,” he told BusinessWest. “And if you did retire at 65, you didn’t have 15 years worth of traveling ability in front of you because you didn’t have artificial knees and hips and stents; all that has changed.

“You have 70-year-olds getting new knees and going skiing,” he went on. “That was unheard of 30 or 40 years ago; people didn’t ski at 70, let alone take up skiing at 70.”

When the company runs financial plans for couples now, said Matty, it does do knowing that the odds are good that one of the spouses will live until age 95.

“So if you want to retire at 65, you need to be planning on 25 to 30 years of your money working for you,” he continued. “That’s a long time. I get it — you want to travel for the next 10 to 15 years, when you’re between the ages of 65 and 80. How do we structure a plan that’s going to support all that?”

Overall, Matty said, as his firm works with clients in this environment, there are certainly talks that are financial in nature. But an equal number of them — if not a greater number of them — are “psychological” in nature.

And they involve everything from often-complicated end-of-life matters to simply convincing people who have, indeed, done very well when it comes to saving for retirement that, when they get there, it’s OK to spend the money they’ve accumulated.

And there are many people who need convincing, he told BusinessWest.

“People get to that stage [retirement] by foregoing and saving for the future, foregoing and saving for the future,” he explained. “At a certain point, you have to flip that switch a little bit and say, ‘it’s OK; this is why I did all that — I don’t have to keep doing this for the rest of my life.’ Sometimes, your job really is to tell people, ‘it’s OK to spend it.’”

As for end-of-life issues, Matty said these emotional times are often made even more difficult by uncertainty about whether survivors will be adequately taken care of, and the pressing need to make sure they are.

“Often, you’re having a conversation with them, and one of them is lying in a bed they’re never going to come out of,” he said. “And often, it’s the one in worse health, the one who’s passing away, who wants to make sure that the other one is OK financially, and they really need that assurance.

“It’s a fairly easy financial conversation to have at times, because the money is there,” he went on. “But it’s really, really, really about trying to make that heartfelt assurance to someone to things are going to be OK, especially if the one who’s passing is the one who made all the financial decisions.”

Matty said he’s had a number of these discussions, and he remembers one instance where he was called to a home for a talk with a woman who was about to enter hospice and wanted assurances that her husband, suffering from Alzheimer’s disease, would be OK.

“She knew nothing about the financial situation, she knew nothing about how their will was structured, etc., etc.,” he told BusinessWest. “I called back to the office and asked the receptionist what I had on the schedule, and then I told her to call and cancel.”

He spent the next several hours going through the will, looking over insurance policies, and making sure all questions were answered and every matter was resolved.

There have been a number of cases like that, he said, adding that all the financial advisors at the company have what amounts to a license to clear their schedules in such instances because they’re paid a salary, not commissions.

Getting to the Top

These anecdotes show clearly just how much St. Germain has changed over the years.

Instead of taking a check and investing the money, the company is leading from behind and guiding clients on a certainly challenging trek, one in which a plan has to be made, risks have to be assessed, and unforeseen circumstances — life’s equivalent of 50- or even 100-mile-per-hour winds — are anticipated and accounted for.

Returning to the hike up Mount Washington, Matty said his goal for the day “was not to make good time, but to have a good time.”

That’s the goal for retirement as well, and this company has moved to the top within this industry when it comes to helping people do just that.

George O’Brien can be reached at [email protected]

Wealth Building

Stay the Course

Jean Deliso, CFP said she started calling her investment clients several days ago to gauge how they’re feeling amid some growing turbulence for the economy — and on Wall Street.

As she talked with BusinessWest about this initiative, she paraphrased the message she would leave if she encountered voicemail. “We just want to check in to see how you’re doing. The market has done very well, but we’ve seen some volatility in the market, and want to know how comfortable you are. On a scale of 1 to 5 (with ‘5’ representing the highest level of anxiety), how are you feeling about volatility, because there’s a political environment going on, we have China going on. Are you comfortable that your assets are positioned well?”

Again, that was the gist of the call. Deliso, owner of Agawam-based Deliso Financial and Insurance Services, said the firm has contacted about half the investment clients, and so far, there have a lot of 1’s and 2’s and generally nothing higher than a 3. And she’s not exactly surprised.

She believes those numbers tell her she’s doing a good job of helping her clients not just invest, but create and execute a plan. It also means she’s done well explaining to people that volatility — and yes, the markets have seen some this year amid trade turmoil, interest-rate movement, the dreaded inverted yield curve, and recession talk — is part of investing and nothing to really be feared.

“It’s important to keep their timeline in mind and not panic,” said Deliso, adding quickly that matters change the closer one is to retirement. “If you have 20 years … take a long-term perspective, don’t panic, don’t sell, and learn to live with volatility, because you can benefit from it because there are opportunities.”

That last comment is a perfect segue to the three words investment managers and financial planners always summon at times like these, especially for people with a long time window — ‘stay the course’ — as well as the seven words they also put to frequent use — ‘you shouldn’t try to time the market.’

“My job is to make sure, when these clients go into retirement, or are in retirement, that they have peace of mind. I want to make sure they’re not going to be emotional when the market drops. I want them to be secure that they know that, if it drops, they’re OK.”

Karen Dolan Curran, MBA, CFP, a principal with the Northampton-based firm Curran & Keegan Financial, used both phrases, and turned the clock back to 2008, the start of the Great Recession, to get her points across.

“In 2008, most portfolios lost an average of 30% to 40% of their value,” she recalled. “But if you stayed in those portfolios, they fully recovered after close to 18 months; you had to play the cycle out. And if you tried to go or if you tried to time the market as to when to go and when to jump back in, most people failed — because the most challenging part is trying to figure out when to jump back in. Those who stayed did fine.”

Neither Curran nor anyone else we spoke with is predicting anything close to 2008 again. In fact, some are hedging their bets on whether there will be a recession, not only this year but next year.

“In 2008, most portfolios lost an average of 30% to 40% of their value. But if you stayed in those portfolios, they fully recovered after close to 18 months; you had to play the cycle out. And if you tried to go or if you tried to time the market as to when to go and when to jump back in, most people failed.”

“We don’t believe that recession is coming necessarily in the next 12 months,” said Curran, noting that, while there a number of matters contributing to tension nationally and globally, overall, the economy is quite solid and unemployment and interest rates remain quite low, and investors should keep this in mind moving forward.

Still, the dreaded ‘R’ word is being heard and read more frequently these days, and that’s one of the reasons why Deliso launched her survey, noting that it’s a good conversation to have and she has it at least annually with clients.

The results of her polling, as noted, show there is not a high level of fear, a reaction that seems to mirror what’s happening on Wall Street, where, despite some turbulence and uncertainty, the S&P is up nearly 20% (or was at press time; things can change quickly), and when most of those ‘fear/greed’ gauges are tilting more toward the latter.

Beyond that, the comments seem to indicate that she’s doing well with what she considers her primary assignment. And that is to take fear out of the equation for her clients, even at times, like this one, in some respects, when one might be tempted to show some fear.

“That’s how this practice works; we provide a tremendous amount of education,” she explained. “And we make sure clients are positioned well with fixed assets and investment assets, because when we set people up for success, there’s a balance between the two.

“My job is to make sure, when these clients go into retirement, or are in retirement, that they have peace of mind,” she went on. “I want to make sure they’re not going to be emotional when the market drops. I want them to be secure that they know that, if it drops, they’re OK.”

Curran said her firm works in much the same way, with an emphasis on financial planning, not simply investing. As a result, she said she rarely gets a ‘panic’ call from an investor when the market takes a tumble, as it’s done a few times this year, or even when it takes a hard fall, as it did in the fourth quarter of last year.

She told BusinessWest that her firm helps clients plan against the backdrop of what she called the ‘worst-case scenario,’ meaning what happened in 2008.

“We do a lot of stress-case analysis,” she explained. “Saying, ‘well, what is the basic assumed market return? What if the market fluctuates downward during a particular time? What if it is nothing but positive for a particular time?’ And in certain cases, we replay 2008 right at a point of retirement, because that is the worst-case scenario — the moment you retire and you draw on your investment, the market comes down.

“We do all those simulations with clients so, when there are swings, like that 800-point drop recently, we get few, if any, calls, because we’ve already considered the worst-case scenario,” she went on, adding that, when people retire, they have more free time and spend some of it watching — and worrying about — the markets and their investments. “We don’t want them to have those reaction swings.”

Thus, the firm, like Deliso’s, recommends that those entering retirement do so with six months or perhaps a year’s worth of cash reserves to draw on, rather than their retirement savings.

Curran said effective planning, not to mention a willingness to stay the course, or “play the cycle out,” as she called it, is critical in this environment where interest rates on CDs and other very conservative forms of investing are far too low to generate real returns.

“The new norm is that people can’t go to a conservative portfolio of bonds and cash in retirement and live comfortably,” she said. “They have to be in the market, and they have to feel the weight of the ebb and flow of the market and understand that, if they stay long enough, the market will give them a positive return.”

Deliso agreed and reiterated that a big part of her job is to remove fear from the equation through proper planning and an effective mix of investments and fixed assets.

That’s why she hasn’t had anything over a 3 yet from her phone poll, and why she isn’t expecting any, either.

— George O’Brien

Sections Wealth Building
Critical for Effective Wealth Building

WealthBuildingSome watched the financial collapse in 2008 severely hamper their parents’ retirement plans. Others are simply working at jobs without pension benefits and doing the math.
For whatever reason, young people are starting to take a more serious look at their long-term financial future — a trend Patricia Grenier finds gratifying.
“For the first time in many years, I’m actually seeing young professionals — dual-income couples in their early 30s — coming in to talk about financial planning,” said Grenier, general partner with BRP/Grenier Financial Services in Springfield.
“That’s very surprising because, in the past, I always used to say, ‘I wish I could get them when they’re young, when time is on their side and they can ride the many ups and downs in the market.’ But now, they’re coming in at a much younger age, which gives us a lot more flexibility, a lot more time. It allows us to fix things and make adjustments as we go along.”
George Keady, senior member of the Keady Ford Montemagni Wealth Management Group at UBS Wealth Management in Springfield, makes a similar observation.
“The clear trend in the past five to seven years has been people starting younger,” he told BusinessWest, noting that some of that may be based on encouragement from their employers, many of which enroll them in self-funded retirement accounts almost immediately, and the employer must take the initiative to unenroll.
“Young people today assume they’ll have to take full responsibility for their retirement,” Keady said. “The era of defined benefits and pension payments is being reduced dramatically, so people are taking responsibility through 401(k) plans and savings.”
Doug Wheat agrees. “Certainly, many employers now automatically enroll new employees in 401(k) plans, and that has made a huge difference in what the participation rates are,” said the senior manager of Family Wealth Management in Holyoke. “While there may be more awareness, I think the automatic enrollment has made the most impact.”
While the world of the Internet age is definitely more educated on financial matters than it used to be, Grenier said many young professionals took lessons from the 2008 crash and what it did to the retirement savings of people they know, including their parents. Whatever the reason, they’re increasingly starting early to seek strategies to build and protect wealth.
“They’re more aware,” she said. “We have more knowledge 24/7; we know what’s going on. You can turn on the TV anytime and see exactly what’s happening in the world and in the economy. But there are strategies you need to apply that can’t be learned by turning on the TV. You have to sit down and plan.”

Planning Ahead

Pat Grenier

Pat Grenier says one of the biggest financial mistakes people make is underestimating how much money they will truly need down the road.

Some strategies are time-tested common sense, Grenier noted: save at least 10% toward retirement, prioritize spending and stay within one’s means, and do not build credit-card debt.
As for specific plans beyond the basics, when Grenier talks to younger investors, “they’re asking, ‘am I doing the right thing?’ even though retirement is 30 years down the road for them,” she told BusinessWest. “The lesson to be learned from this big downturn is you need to plan, you need to have a plan B, and if you think you have enough money, you don’t. You always need more money.”
To that end, she added, “I am seeing the younger ages more willing to plan and be flexible. And, unlike older clients, both spouses are usually involved in the decision-making process.”
Wheat said young professionals need to use the time they have to save for retirement, even though it seems so far down the road, “because they can take advantage of compounding interest by starting early. When you do that and build wealth slowly over time, the ultimate goal can be less daunting.
“If young people can target 10% to 15% of their take-home pay to put automatically in a 401(k) or 403(b) plan at work, it makes it relatively painless to contribute to retirement goals down the line,” he continued. “If they do that, it’s much easier to reach a retirement-savings goal which maintains their standard of living in retirement.”
That’s because, “in general, people underestimate how much they may need, and even when they’re contributing to a retirement plan, they often don’t contribute enough.”
If nothing else, Keady said, workers should maximize their company match if there is one, because every dollar makes a difference compounded over time. “If somebody starts putting $15 a week away in their 20s, in 40 years at 6%, they’d have $130,000.”
But that’s just the beginning, he said. “If they get started early, they can sit down and construct a real plan, not a one-size-fits-all solution. We have clients show up in their late 50s, and they’ve accumulated some money, but they really don’t totally comprehend what they need in the years ahead. People in their 40s who have accumulated some money have more options in the planning process.”
One reason young people might be starting on a savings and investment plan early is the cost of college tuition, which has far outpaced the general inflation rate over the past quarter-century.
“The young couples I’ve had this year are really concerned about the cost of education, what it will cost them to educate their children. Personally, I think college tuition is the next big bubble; it’s unsustainable,” Grenier said, noting that the average private college costs about $55,000 per year for tuition, room, and fees. “Even if their kids aren’t going to school for another 10 or 15 years, at today’s cost of college, there’s no way they’re going to be able to save enough money. Coming up with a strategy for them to alleviate the college load is really important.”
Wheat, who wrote about planning to pay for college in the May 6 issue of BusinessWest, agreed that it’s a daunting prospect. “Most people don’t have nearly enough to pay for college. The question becomes, how much debt are they willing to bear? Sometimes they take on more than they should — both college students and parents — and don’t think carefully about taking on more debt.”

Age-old Questions
For older individuals and couples, of course, expenses change as the retirement years loom.
“For people in their 50s and 60s,” Keady said, “those are the years where maybe tuition responsibilities are behind them, they’ve paid for their home, and now they’re thinking about themselves, thinking about retirement income, but also thinking about long-term care issues. That comes with longer life expectancy.”
What those people need to do, Wheat said, is to think about how much they need to maintain their standard of living, and then decide whether their goals are reasonable based on their expected income. If not, “are you going to cut back on your standard of living now or wait until retirement to do that, or do a little bit now and a little later?
“Most people, when they’re thinking about wealth building, really need to start with the basics of what they’re spending their money on and what their total expenses are,” he continued. “Are they spending money on things they really value, or are there places in their budget where they can cut back? For some people, creating artificial spending barriers is helpful for doing that. One of the classic ways to create an artificial spending barrier is to have part of your paycheck go directly into a savings account, where maybe it’s not as easily accessible and not as easily spent.”
Keady also suggested workers increase their withholding with every increase in their salary as another means to painlessly boost their savings. Still, Wheat said, most often the main issue is spending, not saving.
“It’s surprising how few people really know how much money they spend every year,” he told BusinessWest. “People know what their take-home pay is every week or every month, but they don’t necessarily think about it in terms of how much they’re spending for a whole year. The end result, for a lot of people, is spending small amounts of money on lots of things that are not that valuable to them, and it ends up being a lot of money — $20 on this, $25 on that, and $30 on this, and pretty soon it’s thousands of dollars every year.”
It’s an issue that knows no age limitations. “For younger people, the strategies are different because they’re in the saving mode and the spending mode; they might have young children,” Grenier said. “We know their expenses are going to be high, so we come up with a spending plan that suits their needs.”
Similarly, “if I have an older couple who are going to be retiring within the next few years, we’re going to try to find out what their expense needs are going to be and the sources of revenue coming in,” she explained. “If we can cover their fixed expenses, that’s strategy number one; then the rest of the money is gravy, the icing on the cake that allows them to keep up with inflation, allows them to do all those extra things, allows them to have peace of mind if the market drops, so they don’t have to panic.”
Still, the crash of 2008 has changed many experts’ minds about how to build an emergency fund. “Before the crash, we said, ‘make sure you have six months of living expenses.’ Now it’s one year, maybe two years of living expenses in investments they can easily get their hands on.”

Working for a Living
While younger professionals are still mapping out a career path, Wheat said, many older workers are realizing they’re going to have to work longer than they expected, and not just because of the impact 2008 had on many people’s savings.
“Over the past three or four years, Social Security has placed an incentive for people to delay accessing their Social Security benefits, keeping people in the workforce longer,” he said, noting that the traditional average retirement age of around 62-65 has slowly risen to around 65-67. “The fact is, people are living longer — 20 to 30 years after retirement.”
And, in many cases, Grenier said, “they’re outliving their money. It’s tough.”
Even the best-laid plans, for both younger and older investors, aren’t foolproof, which is why it’s important to continually reassess one’s goals and strategies, she added. “Planning is a dynamic process, and you have to make adjustments as life goes on, because life events happen. If you start early, you’ll have more options as to how to get there.”
Wheat said people often become overwhelmed by the prospect of changing course in their wealth-building plans, when actually making a change may not be so difficult. “Taking a half-hour or hour to make small changes can make a big difference.”
Fortunately, said Keady, whose group specializes in higher-net-worth individuals, today’s investors tend to be very engaged. “Clients are much more sophisticated and demanding. They want a comprehensive plan as they accumulate wealth. They expect more out of us than just investment advice. So we’ve got to adapt to changing client demands.”
Those demands, Grenier noted, are much easier to meet when clients start young, so they’re able to ride the inevitable ups and downs of the markets and take a long-term view.
“They can take more risks and look at alternative investments,” she said. “It’s exciting to me to see the younger people becoming more engaged.”

Joseph Bednar can be reached at [email protected]