How ORP participants benefit from actively managed strategies.

In 2000, several factors came together at the same time. I was always interested in being self-employed, and my mother decided to start the transition out of her financial-services practice. She wanted to have complete confidence in someone to take over her clients when she retired. She felt that she could trust me to assist her current clients through the various phases of accumulation, retirement-income planning, and so forth.

I was ready to leave the nonstop travel of corporate sales, and this was perfect timing. I immersed myself in training and licensing in the financial industry and ultimately completed my CFP work. My mother and I really enjoyed working together, and our knowledge complemented each other in various areas—we actually ended up working together for about 14 years.

It is a fairly specialized area, and I have developed a deep expertise in the field. Since many ORPs offer participants the opportunity for self-directed investments, I can add value by helping them understand the investment approaches that will benefit them over the long run, while protecting and growing their money.

ORPs are a substantial part of our practice, but we also offer our services to clients with traditional financial planning and investment needs. I get referrals to clients with qualified and nonqualified money and take a full financial and investment planning approach with every client.

My ORP clients can be people just entering the workforce or those still working in their late 60s and everywhere in between. They tend to be very busy in their university roles and do not have a lot of time to think about sophisticated financial issues or approaches to investing.

I have been an advocate of active investment management since I started in the business and use highly qualified third-party managers. My clients ultimately want financial security for their ORP money, so we use managers with a focus on risk-managed strategies.

I also explain to those who might be fearful about the equity markets that they can consider being a bit more aggressive, because there is a sophisticated money manager looking at their account on a daily and weekly basis for risk management. Since these managers have models that study trends and other indicators, it should not be a matter of having to worry about every small market movement. It is just the opposite of buying and holding, and hoping that things will go well.

The biggest selling point for active management is the fact that we essentially have several levels of built-in risk management. First, on the big-picture level, my broker-dealer and my firm conduct due diligence on money managers to make sure they are highly qualified at what they do. I explain to my clients that a major part of my job is to study and investigate investment management firms. Second, these managers are applying very sophisticated research and analytical tools to track market trends, their strategies, and client accounts on a continual basis. And, finally, I monitor the managers to confirm they are executing well on their particular investment philosophy and strategies.

I tend to be conservative in discussing return expectations with clients. As a planner, I am much more concerned with making sure long-term financial goals and objectives are met, rather than focusing on a specific return number. That said, I work very hard to identify and select effective active money managers.

These managers really proved their immense value in the last bear market and should again in the next bear market. It is not a question of if it is going to happen, but when it is going to happen and how long and severe it will be. I think that is one of the most important attributes that I can bring to clients—the fact that they can have an increased measure of peace of mind knowing their investments are being managed in a way that can deal with any market environment. There are no guarantees in anything in life, but, in my opinion, an actively managed portfolio is far superior to a passive investment approach.