Goals and values inform sophisticated client solutions
Goals and values inform sophisticated client solutions
After working in the hospitality industry after college and then for the Pennsylvania Department of the Auditor General, I was looking for a career change where I could be more entrepreneurial. Working for the auditor general provided great exposure to the audit process, pensions, investments, trusts, and actuarial sciences. This prompted my interest in seeing how I could build on these skills in helping individual and business clients. I was pleased to be able to join CIGNA’s Individual Financial Services division in 1989, which was acquired several years later by Lincoln.
I feel very fortunate to have spent my financial-services career under the umbrellas of CIGNA and Lincoln Financial Advisors. CIGNA had a strong culture of data-driven financial planning, and I had great training and mentorship there. Perhaps most importantly, CIGNA’s culture was based on one of its leaders from the 1940s, who coined what is known as the “Serve First” philosophy. That means always placing the client’s needs first and providing unbiased, highly customized guidance. I also characterize the “Serve First” idea by saying we seek to understand before seeking to be understood. That philosophy remains central to our mission today.
When I am asked what I do for a living, I am not really fond of the traditional industry labels. Financial planner is probably the closest description, but I feel that we work with clients in a larger context. “Serve First” can only be truly delivered with deep knowledge, flexible thinking, an open architecture of solutions, and a collaborative spirit. We never stop growing and learning so that we can consider and communicate the best options for our clients. In the broadest sense, I talk about things that truly matter with people who care.
We have no account minimums or set criteria on the types of clients we will work with. We have a broad variety of clients from all walks of life, with a range of income and asset levels. We look for an attitudinal fit with our firm, a sincere desire to improve one’s financial future, and the willingness to commit to the planning process.
Our firm is well qualified to handle the most sophisticated planning needs. We want to help all clients grow and transfer their wealth. We specialize in the design, implementation, funding, communications, and services of complex planning solutions.
This naturally leads to more of a focus on higher-net-worth individuals or families and business owners, including our clients with nine figures in assets. Our skill set includes deep knowledge of retirement planning; estate, legacy, and charitable planning; business exit planning; and a wide variety of a business owner’s other specific planning needs. These might include compensation, retirement, pension, and profit-sharing planning; employee stock ownership plans (ESOPs); risk-management strategies; business valuation processes; and tax-mitigation strategies.
As one myself, I relate well to the mindset of business owners. A business owner is ready to hear it as it is and tell you like it is—they’ve been doing it their whole life. And I find the ideal business clients are thirsting for growth and knowledge, which led to their business success in the first place.
I believe we also have two distinct competitive advantages beyond the factors I have already mentioned. I was one of the first Certified Business Exit Consultant (CBEC) designees. This rigorous field of study demonstrates competence and leadership in the psychological and technical areas of business succession planning.
I’m also a founding member of the Business Intelligence Institute (BII) and one of three partners of Equity Strategies Group (ESG), both within Lincoln. ESG has about 20 investment bankers that can help take companies to market, raise capital, or develop and fund ESOP transactions. These are high-stakes endeavors for the business owner. I find dealing with the two largest financial transactions of a client’s life to be a great privilege. By this I mean the exit or transfer of a closely held business and estate transfer. I enjoy quarterbacking the entire financial-planning process and pride myself on being able to effectively consult with other stakeholders, whether family members, key employees of a business, or other trusted advisors such as CPAs or attorneys. We often set up what I call a “virtual board of directors” that meets to make sure all of the stakeholders are on the same page and that communications are clear and direct.
We emphasize process over product and conduct needs-based financial analysis and then generate sophisticated solutions. It’s about understanding everything we can regarding the objective and subjective nature of a client’s life so that we can develop options that make the most sense. We implement the options that are selected collaboratively with the client—consulting as appropriate with their other advisors—and then we thoroughly service and monitor those solutions.
We conduct financial modeling for all of our clients during the process of financial and investment planning. We typically will look at three different types of and purposes for investment approaches. The first is a core approach that will be used to generate income throughout different market conditions and typically will supplement Social Security, pension, or other sources of income. The second tranche is more long-term-growth oriented, and we implement strategies across various asset classes and sectors, rebalancing and reallocating as necessary. While we employ risk management in a broad sense here, these types of investments may fluctuate in value to a certain degree in different market cycles.
The third element is geared toward alpha generation. We have explored the offerings of many different third-party managers over the years. We are now using two different algorithm-based and risk-managed funds that can have periods of higher volatility, but they have produced strong returns over time. The percentage allocation for any given client to the third tranche is dependent on their overall plan objectives, time horizon, and risk profile. We have an in-depth process to educate clients and come to a mutual understanding on their specific asset-allocation philosophy and cash-flow needs. Then we implement and service their strategies, conducting quarterly calls or meetings to review progress versus objectives.
We have very robust discussions with clients about risk management. For example, we stress the differences between typical market corrections—which a properly constructed portfolio allocation can withstand—and recessionary environments—which can create steep drawdowns and require more aggressive risk mitigation. We closely follow macroeconomic and market trends and indicators, and we communicate often to clients about the current market environment.
A client’s true risk profile is something that needs to be discovered jointly by both the client and the advisor. The client needs to understand how they’re going to react in adverse markets—and the advisor needs to factor that into the investment plan. I also think that risk management is something that people evolve with over time. They evolve in their situation in life and understanding of the market. That is one of the most satisfying aspects of guiding clients: demystifying the markets and helping clients to understand how they should expect their portfolio to handle changing market conditions.
We fully communicate to prospective clients our qualifications, process, and attitudinal perspective on what they can expect in working with our firm. These are outlined in our initial discussions and reinforced in formal engagement proposals. We have a strong record of growth and success, and our clients report a high degree of satisfaction with our services. We are never looking to rationalize our performance on behalf of clients; we always want to be transparent and proud of our recommendations, service, and continuing commitment to client needs.
Our ultimate goal for all clients is to help them make informed decisions on how they can best optimize the wealth and business success they have achieved over the years. Importantly, their financial strategies should reflect their personal goals, values, and life objectives. We know it is about the life they can actualize and the people they love and care about.
Planning that addresses the unique needs of business owners
Emrich M. Stellar Jr. is the founder of Stellar Advisor, a financial-services practice located in Lehigh Valley, Pennsylvania. He is also a partner of Equity Strategies Group (ESG) and founding member of Lincoln National’s Business Intelligence Institute (BII). As a Chartered Financial Consultant (ChFC) and Certified Business Exit Consultant (CBEC), he has been helping business owners grow and transfer their wealth for over 30 years.
Mr. Stellar says his firm’s goal is “to simplify the planning process to its essence, empowering business owners to make sound and appropriate decisions to move their enterprise and their financial situation forward.”
Stellar Advisor’s comprehensive services in this area include the following:
- Analyzing the client’s present succession/exit plan.
- Determining the effectiveness of the present plan and recommending appropriate changes.
- Making a preliminary determination of the reasonableness of existing estimates of business value.
- Illustrating the economics of the alternatives available to fund business agreements.
- Discussing options to help minimize the tax liabilities incurred in business transfer transactions.
- Facilitating the implementation of exit/transfer strategies agreed upon in the overall consultation process.
- Coordinating the plan with estate arrangements.
Emrich M. Stellar Jr. is the founder of Stellar Advisor, a financial-services practice located in Lehigh Valley, Pennsylvania. He is also a partner of Equity Strategies Group (ESG) and a founding member of Lincoln National’s Business Intelligence Institute (BII). Mr. Stellar specializes in the design, implementation, funding, communications, and services of complex planning solutions for his clients. He also has extensive experience in the areas of business succession and estate planning.
Mr. Stellar was raised in eastern Pennsylvania. He says he had a great family life and enjoyed sports, especially football and skiing. He also was very interested in photography. He says running a large paper route taught him the value of “a strong work ethic and communication skills.”
Mr. Stellar graduated from East Stroudsburg University with a degree in hospitality management. After working in the hospitality industry, he joined the Pennsylvania auditor general’s office, where he primarily audited municipal pension programs. He says this provided invaluable exposure to “the details of the audit process, investments, trusts, and actuarial sciences.”
Mr. Stellar then joined CIGNA’s Individual Financial Services division. During his career with CIGNA and Lincoln, he has qualified for many honors, including the Top of Council multiple times. He is a charter member of The Resource Group, an elite planner group within Lincoln/Sagemark. Mr. Stellar is a speaker on many financial-planning topics and has earned the Chartered Financial Consultant (ChFC), Chartered Life Underwriter (CLU), and Certified Business Exit Consultant (CBEC) designations.
Mr. Stellar is a past president and board member of the Lehigh Valley Society of Financial Service Professionals. He is a member of the International Exit Planning Association, the Estate Planning Council of the Lehigh Valley, and most recently chairman of the Lehigh Valley Charter High School for the Arts. He is also the former treasurer and board member of the Lehigh County Authority Board and a former Cubmaster and Scout Leader. In the 1990s, he was elected to two terms on the Lehigh County Board of Commissioners.
Mr. Stellar is married with four children. He says, “I love spending time with our family, and enjoy skiing, golfing, and motorsports.”
Disclosure: Securities and advisory services offered through representatives of Lincoln Financial Advisors Corporation, a broker-dealer and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliate companies. Lincoln Financial Advisors is not affiliated with Stellar Advisor. CRN-3741988-090121
Photography by Michael Branscom