Banking on a strong client relationship
Proactive Advisor Magazine: Brad, please describe your role as a financial advisor working with clients of your bank.
My role is the same as that of an independent financial advisor: to deliver high-quality financial guidance, education, products, and services to clients. These products and services can cover a significant number of strategies related to financial planning such as retirement income; funding college costs; and covering insurance needs, including long-term care and estate planning.
There are three main differences to working within a bank environment versus working independently, all of which I believe work to the benefit of my clients. First, many of my clients have an existing financial relationship with Bell Bank. New clients either come in through a current client referral or directly through a banking relationship. There is a certain comfort level for people in knowing that they are working with a representative of a highly respected financial institution.
Second, since I am taking a holistic look at an individual’s or family’s overall financial-planning needs, it is beneficial to have access to many different professional resources. These include all of the appropriate departments of the bank, such as our asset management team, a specific financial-planning group, 401(k) experts, our trust department, and so forth. I also receive excellent support from our broker-dealer, Cetera Investment Services.
Lastly, there is a distinction regarding my compensation. I am transparent with clients in explaining that I am a salaried employee of the bank. My compensation is not impacted by any of the products, services, or investments that I recommend. I want to reassure clients that they are receiving unbiased guidance. A client really should not have to worry about that with any advisor. Full disclosure is very important. I want to make sure people know exactly what they are paying, what it is for, and how it is being charged. But what is equally important is communicating that our objectives are aligned with the client’s—that we are working on the same side of the table.
How does the referral process work within the bank?
Bell Bank is the largest independently owned bank in the upper Midwest, and one of the largest in the nation. We have about 20 branch locations, and I cover clients in four of those branches. Two of those branches are in communities where I have many local ties, so my personal networking is important.
Bell Bank offers many services to retail and business customers across several departments. The real key to the referral process is making sure that the branch employees know who I am and what I do. Senior management is very supportive of that, and our group is prominently featured on the bank’s website and in external and internal communications.
The personal touch is very important, so we conduct periodic bank staff meetings where our advisor group will present information on our capabilities and any new developments in our area. We have also started quarterly “lunch-and-learn” sessions with all of the branch employees. These are part education on financial-planning issues or current market developments and part review of how we can potentially serve the bank’s customers. These activities help keep the advisor group top of mind with bank employees and make them aware that they should be looking for appropriate opportunities to refer our services to bank customers.
What is your approach to planning?
I work with clients in an unbiased manner to come up with the solutions that fit their specific needs and objectives. As a CRC, I strive to enhance the accumulation strategies for clients still in their earning years and to develop sound distribution and income strategies for people in retirement.
Our financial planning revolves around a basic five-step framework:
- The discovery stage, which includes understanding what a client feels is important in their lives and their financial situation and explaining how we work as advisors.
- Learning the detailed facts about a client’s overall financial situation and assets. This also covers a more data-driven, comprehensive review of a current portfolio; establishing investment objectives; and determining a risk profile.
- Developing recommendations based on the financial profile, risk tolerance, and overall objectives.
- Finalizing a plan that best meets the established financial goals.
- Developing an ongoing partnership, which includes review sessions and regular communication. In many cases, it will also be appropriate to work with a client’s attorney, accountant, and other advisors.
I have learned over the years that one of the most important attributes of being an advisor is to really listen to people throughout the planning process. I joke with clients that we were all given two ears and one mouth, and I believe in using them in that proportion! It doesn’t matter how great our solution is if a client isn’t comfortable with it. Planning solutions need to be a great fit for a client’s mindset, personality, and their outlook on life.
“The investment managers that I select have the expertise, staff, and models to construct active, tactical portfolio strategies that will help mitigate risk.”
Explain your approach to investment recommendations.
I tell clients upfront that if they are looking for someone to manage a portfolio of specific stock selections, I am probably the wrong advisor for them. Our approach is all about holistic portfolio management, finding the right strategies for specific growth or income needs, and an emphasis on risk management. I personally believe that individuals will do better over the long run—and with a lot less mental and emotional stress—with managed accounts that employ the insight of professional money managers.
For clients nearing retirement, I use a variation of the bucket approach to investment planning. That really has two meanings that I explain to people. The first is that when we think about retirement today, it could last 30 years or more. We are not only solving for an income need in the immediate future, but also making sure adequate income is there for the long term. As time horizons get further out from today, clients are able to look at investments that might carry a little more emphasis on growth and have some more risk. For the years right after retirement, assets and investments deployed transition to more conservative and liquid.
So, buckets can refer to a time-based approach and how those time frames might differ regarding investment strategies. But there is also a behavioral component. As people age, their activities and spending requirements may slow down, and they certainly have to plan for the possibility of long-term-care needs. It is not unusual to see someone early in retirement wanting to travel a lot or take on new hobbies or new projects. Those kinds of activities will probably be dialed back over the years. So we just need to be cognizant of several sides of the equation and how assets, income needs, and investment returns all tie together.
With the bucket planning approach, we can use many different types of investments, depending on the bucket and the income need. We want to produce growth in later buckets to replenish the first bucket that is funding immediate income needs. The overall investment plan could be a blend of dividend-paying mutual funds, various types of annuities, tactically managed equity or fixed-income funds, and alternative assets such as REITs or BDC closed-end funds. It is a challenging environment right now with very low interest rates, but we are able to construct risk-managed solutions for our clients that can address their needs.
The discussion starts as we develop their specific risk profile. I explain that I am going to use their risk tolerance and their objectives to construct recommendations that I believe will give them a relatively high probability of achieving their investment goals. Those goals are not about beating or replicating the performance of the S&P 500—nor should they be.
A big part of my role is education, whether it is explaining the concept of the sequence of returns or showing clients how various asset classes and sectors have performed very differently throughout the history of the market. When you consider those two factors together, why would anyone want to have their lifetime assets tied to a benchmark that has shown the potential to lose over 50% during a drawdown period?
The investment managers I select have the experience and models to construct active and tactical portfolio strategies that will help mitigate risk. These may not always be the best-performing strategies in all market environments, but they do very well against the objective of minimizing portfolio volatility, achieving competitive returns, and creating a smoother ride for clients. I believe that this approach provides a very valuable benefit for our clients, especially those facing their retirement years.
Brad Bakken is a vice president and financial advisor with Bell Investments, located at Bell Bank. Mr. Bakken has over 20 years of experience in the financial-services industry, with knowledge in insurance, retirement and financial planning, employee benefits, and investments.
Mr. Bakken grew up in Rugby, North Dakota, a small town recognized as the “geographical center of North America.” He studied at North Dakota State University in Fargo and started his business career in the retail and food-services industries. He later transitioned to financial services and worked in positions of increasing responsibility with the nonprofit Lutheran Brotherhood (now Thrivent Financial) and BancWest Investment Services.
Mr. Bakken joined Bell Investments in 2012 and says, “I feel the culture and reputation of this company is the best in the industry. When everyone works together to exceed our customer’s expectations, everyone wins.” He provides a variety of planning and investment services for the clients of the bank and particularly enjoys working to address the multigenerational needs of families. A Certified Retirement Counselor (CRC), he works with pre-retirees on accumulation strategies and post-retirees on distribution planning.
Mr. Bakken and his wife have two adult children and seven grandchildren. He enjoys spending time with his extended family and friends, and—when time permits—he plays racquetball and golf. Mr. Bakken served as president of the local Chamber of Commerce, the Wahpeton school board, and the Kiwanis Club, and has taught courses at North Dakota State College of Science. He is also an active participant in his bank’s “Pay it Forward” charitable-giving program.
Disclosure: Financial advisors offering securities and insurance products through Cetera Investment Services LLC, member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither firm is affiliated with the financial institution where investment services are offered. Advisory services may only be offered by investment adviser representatives in conjunction with an advisory services agreement and disclosure brochure as provided. Investments are not FDIC/NCUSIF insured, may lose value, are not financial institution guaranteed, are not a deposit, and are not insured by any federal government agency. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing. Bell Investments, 717 Second Ave. N., Wahpeton, ND 58075. 701-672-2265.
Photography by Dan Koeck