by Carolyn EllisMs. Ellis is Features Editor for LIFE&Health Advisor. Connect with her by e-mail: firstname.lastname@example.org
After 30 years as a general agent for John Hancock, Dennis Pettinelli wanted to focus on caring for his own clients. In founding Pettinelli Financial Partners, Pettinelli created the Advisor Team Model, a new framework for agency organization and multi-generational financial planning. Numerous awards, including John Hancock Financial Network Representative of the Year in 2007 and 2012, MDRT Top of the Table and President’s Roundtable multiple years, testify to his success in merging life planning with financial planning for clients of all ages. In 2013 Pettinelli was named one of Signator Investors’ top ten representatives nationwide.
L&HA: Tell us about your new framework for advising, the Advisor Team Model.
DP: Our clients are assigned to a team that includes a Service Advisor and Support Advisor. When we get the client, the firm, the advocate and the service advisor together, we’re bringing together several generations and perspectives so there’s an amazing exchange of knowledge. During my 30 years as a John Hancock general agent, I saw what happens to clients if an agent exits the business without a succession plan. I didn’t want my clients to become orphans. They had helped me build my practice, feed my family, and build my own personal wealth. Eight years ago I put this new model together with a small group, never dreaming it would become what it has. Our broker dealer Signator has been very open-minded and has approved this model. They see that it can provide value at other firms throughout the network. Agencies fly me to their offices to teach them how to replicate it. We get 4 – 6 referrals every week; it’s unbelievable.
L&HA: How would you describe your current practice?
DP: We’re into generational wealth planning. Our biggest contribution is to help people deal with cognitive de-generation and frailty. The statistics on people aging are unbelievable. I started this new gig because I find that as my clients got into their 80s, their cognitive skills start to diminish, but they’ve still got some money.
L&HA: And your primary business is financial planning?
DP: We’re an independent financial services firm, but our relationship with our clients is one of communication. We help them define their intentions and goals and understand various concepts in order to reach their goals. When they get quite old often they’re not able to keep up their part of the partnership. One of two things happens. They say, ‘Dennis, we trust you, you handle everything.’ While that’s flattering, from a regulatory standpoint that doesn’t work. Or they say, ‘We don’t want to do anything.’ Then we’re stuck trying to get them through the next 10 or more years.
L&HA: How do you handle this potentially delicate situation?
DP: When they turn 65 or 70, we start to apply some pressure about bringing in an Advocate, another set of eyes and ears on their behalf. Often it’s their children. We tell them we’re not going to turn their money over to the kids or give them power of attorney. All we want is an advocate, someone who knows them better than we do, to listen and give their insight.
L&HA: You mentioned multi-generational meetings. Are these a review of the parents’ balance sheet?
DP: We take it from a different perspective. When you get to a certain age, you will start to think of your mortality, and how to prepare your children for that, according to your wishes. You don’t necessarily tell your adult children everything, but you introduce them to our team because they might be working with them earlier than planned. Some will become our clients. I prepare Mom and Dad for this meeting in our conference room, and we sit at the back. Parents might talk about moving to a one-story home or assisted living, using rental income to cover expenses, or eventually selling the cabin at the lake. If a question comes up they want us to handle, we will, but we’re there as facilitators. Once we’ve started this conversation at 70, when you’re 78 or 85, we’ll bring them in again. If clients agree, when we have a review meeting, we send their advocates the meeting summary.
L&HA: And all of this is the foundation for managing your clients’ money?
DP: This is about managing their life plan. It could be managing money, but it’s also about what you want to have happen when you get frail. Do you want to stay at home, or go to a facility? Where will the money come from to pay for that? Our approach today is different from 20 years ago, because we talk about things like diet and exercise. Suppose you’re 78 years old and we’ve made you wealthy, but you can’t take a trip to Italy and walk the Cinque Terre with your wife. Have we really helped you? Many people approach their “golden years” thinking a million dollars or a million and a half is a lot of money. They don’t understand that their consumption rate is pretty high, and if you carry that out 25-30 years and you apply inflation, it’s a scary thing.
L&HA: What other factors shaped your Advisor Team Model?
DP: As general agent, I found it had become too hard for young people to succeed in the business. To get the required licenses, it costs money and time, but you still don’t know anything, and you’re not making any money. In our Advisor Team Model most of our staff is on salary so it’s a big responsibility for me. But our team members get vacation, normal work hours, and incentives for great service. They can have a home life. Service members will eventually, after meeting requirements, become equity owners in the firm. Right now there are 19 in our office, with two lead advisors, myself and my son-in-law. Our practice is primarily fee-based. We have a strong second generation team of financial professionals in place.
L&HA: How do insurance products and investments fit in the picture?
DP: Our job is to manage the people, their behaviors, and of course make sure our outside money managers are doing what we hire them for. We educate clients about concepts like step-up basis and sequence of investment returns and how their assets need to be properly owned. Our focus is: Here’s your Meryl Lynch account; what’s it supposed to accomplish? Yes, the money you’ll need for the next 3 — 5 years needs to be safe money, but the buckets you’re going to need at 85 or 90 have got to grow. We want to take care of our clients throughout their lifetime and with succeeding generations, into the future.