THE BIG PICTURE AS JIM BELL SEES IT

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Active management

Cross-Pollination

THE

BIG PICTURE

AS JIM BELL

SEES IT

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January 30, 2014 | proactiveadvisormagazine.com Editor David Wismer Marketing Coordinator Elizabeth Whitley Contributing Writer Linda Ferentchak David Wismer Graphic Designer Roger Ackerman Contributing Photographer Gary Geiger

January 30, 2014

Volume 1 | Issue 4

TIPS &

TOOLS

ost of my client acquisition comes from

networking or referrals from other

professionals and current clients. But I think

there is an untapped and very valuable source

of new business which involves succession

planning on the part of other advisors looking to wind

down their efforts over a year or more. This is a trust

business, both with clients and with your peers.

It is important to be positioned as someone who is

trustworthy, very current in your approach to planning and

investing, and well-respected. You want to demonstrate

to those advisors in your network who are looking to

eventually retire that you will be a proactive advocate for

their clients and take a very personal, hands-on and active

approach. It is a wonderful way to build your business, and

a win/win/win situation.

M

Building your business

through

professional partnerships

JIM BELL

Langhorne, PA

FSC Securities Corporation

Financial Advisor-CFP®, Legacy Financial Services Group Proactive Advisor Magazine is dedicated

to providing a look at important active investment management topics. Distribution reaches a wide audience of financial professionals who advise clients on investments and portfolio management. Each issue features an experienced

investment advisor who offers insights on active money management, client service, and investment approaches. Additionally, Proactive Advisor Magazine offers an up-close look at a topic with current relevance to the field of active management.

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JIM BELL

THE BIG

PICTURE

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im Bell is a great believer in first understanding the big picture of things, whether that be his clients’ compre-hensive financial planning and investment needs or un-derstanding the long-term cyclical nature of the markets. Bell is a financial advisor and Certified Financial Planner with Legacy Financial Services Group in Bucks County, Pennsylvania, where he manages approximately 150 client accounts and over $35 million in assets. Many of these clients are retirees or are on the cusp of retirement, and Bell is entirely focused on making sure they will have the income-producing assets they will need to provide for a comfortable lifestyle going forward.

He believes that the primary tool for doing so is an actively managed approach to clients’ overall portfolios, which demands a great appreci-ation for risk management and constant monitoring of the investment climate. Bell says, “Risk is an interesting thing. It changes as market con-ditions change and it is incumbent on us as financial managers to be far more proactive than ever before. Investors will not stand for significant portfolio losses, not that they ever wanted to, but a lot of the faith in buy-and-hold investing has disappeared… as it should.”

He continues, “I think people are still afraid. They may know that the upside of the stock market could be quite high, but they’re still stung by what happened in 2008 and understand now that the down markets hurt badly. If you’re a pre-retiree or retiree, those down markets were so painful that it does make you leery of committing a lot of your own retirement money into those equity areas.

“I understand that they need adequate and healthy exposure to equities for growth, but how do you manage that without putting yourself at risk again for potentially another significant downturn? When you’re fully re-tired or you’re almost done working, to see your account drop by even 20% can be devastating to the longevity of the income you’re trying to produce.”

The answer for Bell can be found in a philosophy centering on active management far more than in his early days in the business. Bell says broadly of active management, “I see active management as not being satisfied with just how things have been done in the past. Active man-agement is being creative – not just waiting for something to happen, but trying to think ahead to what strategies to use to be proactive. Many actively managed strategies are heavily quantitatively based, which helps to take emotion out of the equation, but not the creativity in putting the overall approach together.”

Legacy Financial is affiliated with the broker/dealer FSC Securities Corporation, based out of Atlanta, Georgia. They provide Bell with a relatively wide selection of investment options and strategies to employ on behalf of his clients.

J

Bell appreciates this freedom and says, “I have a wide array of active management choices, as well as other more traditional strategies. I look at some funds that have a truly global asset allocation perspective and others that have the ability to do many different things depending on market con-ditions. I might, at times, take a significant position in cash, or use alterna-tive investments, trend-following strategies, MLPs for income-generation, and even long/short funds in various asset classes, including equities.

“The key is proactivity and flexibility on behalf of clients and the willingness to put in the work on my part to monitor their portfolios and make adjustments as needed. If that is what is called for, are we going to take our whole business and bet it on the fact that we think the market’s going to go up, or are we going to take our whole business and bet it on the fact that we think the market’s going to go down? That doesn’t make any sense to me or for my clients.”

Bell’s firm provides a very supportive and collaborative atmosphere, where “ten or twenty of us will get together on a regular basis and host presentations from fund wholesalers, representatives of various invest-ment products, or even other portfolio managers. We listen to their best ideas and hear what is new out there and then as a group look very closely at what makes sense and what might be appropriate for our clients. It is very collaborative and we challenge not only the providers, but ourselves.”

He also will use third-party money managers, but is especially demand-ing in their evaluation and performance, saydemand-ing, “Typically, clients pay a little bit more to have a third-party money manager because of that added layer of management. What value do they bring? Are they worth that extra money to the client in bringing another level of performance? Additional diversification? More risk management and security? We talk about alpha. What does a fund manager and their investment approach do to bring those extra results? If they can demonstrate that to our satisfaction, as sev-eral do, we will gladly add them to our ovsev-erall active management arsenal.”

continue on pg. 10

“Active management is being creative – not just

waiting for something to happen, but trying to think

ahead to what strategies to use to be proactive.”

Jim Bell, III

Financial Advisor-CFP®, FSC Securities Corp. Lifelong resident of Lower Bucks County, PA B.A. in English and Political Science

Married for 23 years with two daughters

9

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continued from pg. 8

James Bell is a Financial Advisor-CFP® with Legacy Financial Services Group in Langhorne, Pennsylvania affiliated with FSC Securities Corporation in Atlanta, Georgia.

Securities and investment advisory services offered through FSC Securities Corporation, member FINRA/ SIPC and an SEC-Registered Investment Adviser. Advisor Group is the marketing designation for the wholly-owned subsidiary broker-dealer members of AIG.

Bell is a little “old school” in two areas, which to his mind will never go out of style. He believes in delving deeply into a potential client’s back-ground, lifestyle, and future goals, saying, “I use all of the appropriate and modern sophisticated tools to get at things like a client risk profile, but I want to go beyond that and truly understand my clients on a personal basis. The key is understanding their income needs going forward and developing an actively managed plan that fits their specific requirements.”

He also utilizes dollar-cost averaging, especially for “new money” being applied to equity strategies. Bell says, “Dollar-cost averaging has no emotion. We’re going to invest systematically on the same day of each month, or twice a month, or however we set up that plan regardless of what’s going on in the markets. We’re going to try to be in the right asset classes, but our timing of entry is not what’s important.

“The key factor is the time horizon relative to client needs, and within that we are still going to actively manage. We’re not just blindly putting money in and just waiting for things to happen. I believe a lot in quanti-tatively-based active strategies that can take the emotion out of investing, and I want to use the right blend of all of them… that is a positive thing which resonates with clients, especially as they see how it can work over time. My goal is to have clients come to conceptually see the big picture of long-term planning and an appreciation of active management within that, as I do.”