Multi-generation financial planning with a goals-based approach
Multi-generation financial planning with a goals-based approach
Proactive Advisor Magazine: Larry, what was your path into the financial-services industry?
It is probably as unique a story as you will hear. Growing up, I was always into the outdoors, was an Eagle Scout, and was an early supporter of the ecology movement. The first Earth Day took place in 1970 and had a profound impact on me. I researched the best forestry schools in the southeast and chose to go to college at Mississippi State University, paying my way through school through work-study co-op programs. When I graduated, I was hired by the Mississippi Forestry Commission as a county forester. I loved doing this and found it very rewarding, especially the focus on renewable resources and educating people on sound environmental practices.
Here is where the twist comes in. I had interviewed with a bank’s trust department to become a forester responsible for 100,000 acres of timberland that was being managed for an estate. I was extremely surprised when the bank instead offered me a job to join and train with the regular operations of the trust department. They told me they had been impressed with my commitment to educating people and my long-term perspective on planning. They said that is essentially what the trust department does, helping families plan for legacies over the next 30 to 100 years.
I worked for 16 years as a trust officer and estate planner, with my last position as a senior vice president for Wachovia Bank in their Charitable Funds Management Group. This involved working with families to establish charitable foundations or trusts, ensuring that their legacy wishes in that area would be fulfilled. It was very rewarding to help families achieve a higher purpose with their wealth.
Throughout this part of my career, the estate planning and wealth management I was doing was sophisticated and involved many different types of asset classes. These ranged from traditional stock and bond investments to energy resources and real estate, and just about anything else you could imagine. I also had to work with many different types of financial, business, and philanthropic organizations. Though I was not actively implementing investment strategies, I was managing trust assets of many kinds. I think I developed a unique perspective that would serve me well as an independent financial advisor. With my wife’s support, I made the transition into that side of the business, ultimately becoming a Certified Financial Planner.
Talk about your overall client-service philosophy.
I run a fee-based, holistic financial-advisory practice that is oriented toward the needs of multiple generations of families. It is also a practice that is grounded in values. The name of our firm is based on a biblical verse that can essentially be distilled down to the principles of fairness, kindness, and justice. I believe in always working with those principles in mind.
I also have a strong commitment to service excellence and the motivation and education of clients. I want to help them make appropriate choices for their personal financial situations and those of their families—for generations to come. I think people need to understand the difference between being sold a product or service versus being provided the knowledge and guidance to participate in sound financial decision-making. At the core of everything we do is education, followed by developing mutually agreed upon and actionable planning decisions. I believe that my family background, my education, my involvement with scouting, and all my career experiences have influenced the way I work with clients, placing an emphasis on integrity in how we work together and a focused commitment to serving their specific needs.
Broadly describe your planning process.
I take a hands-on approach with my clients, acting as the data gatherer, relationship manager, financial planner, and analyst. I have tried to keep my client base at a manageable number, and I think that is advantageous for getting deeply involved with different generations of a family. My overall planning process is goals-based and in keeping with the general principles developed by the Certified Financial Planner Board of Standards.
My belief is that any financial plan must start with life as the central focus and then move outward to the services and products that fit the specific needs of each person. This process greatly increases the likelihood that the objectives of each financial plan will be met with success. From the center of the planning process come four key areas of focus that can then lead to the more traditional financial process. I delve deeply into the following question areas with clients:
- Life history: How have you arrived at where you are today—including the life-changing events or defining moments that have occurred in your life up to this time?
- Life transitions: What are the changes or transitions that you are currently faced with or expect to take place? How will these events impact your finances and the life goals that you have set for yourself, your family, and future generations?
- Life principles: What are the values or guideposts by which you make important life and money decisions?
- Life goals: What would you like to have, do, or be during the rest of your life? What, ideally, do you see as the path to best accomplish each of these?
“The bottom line is to help clients establish meaningful and achievable goals.”
While I think this type of discovery and values discussion is extremely important to the planning process, so is quantitative analysis. I consider that to be one of my strengths, as it pertains to examining different planning assumptions and scenarios and evaluating alternative investment plans and portfolio allocations.
As I work through the process with clients in a collaborative fashion, we will address a full range of financial-planning issues as appropriate. These might cover insurance needs, risk management, wealth management at various stages of life, and retirement planning—all with a consideration of potential tax issues. In addition to being a Certified Financial Planner, I am also a Chartered Advisor in Philanthropy. I believe I bring extensive knowledge in the legacy planning area and can help clients articulate and plan for their highest aspirations. Throughout this entire financial-planning process, the bottom line is to help clients establish meaningful and achievable goals, and then help them develop action plans that seek to meet those goals.
What is your overall investment philosophy in working with clients?
It is very specific to a client’s objectives, time line, and risk profile and, again, is a goals-based approach. Whether it’s retirement distribution, leaving a legacy to the family, a charitable intent, or all of those, there are specific goals that can be developed. I will help clients identify the level of funds needed to be available at a point in time in the future to help meet those goals. Then it comes down to the quantitative analysis. To greatly simplify, we identify what needs to be accomplished and what level of risk and return is appropriate over the time frame to achieve a specific financial goal. We then can put together the entire investment plan working in this fashion.
I believe risk management is extremely important in our investment-planning process. It does little good for a client and me to work diligently together to develop a goals-based financial plan if we are then going to let volatility and natural cycles of the market disrupt those plans—as many people planning for retirement saw in the credit crisis.
The solution to this that I will generally propose is using some combination of actively managed strategies in an overlay with more traditional passive strategies. We want to keep risk in check to the degree possible, and tactical strategies can help in that regard. For these, I turn to a select group of third-party managers who have a variety of quantitatively based strategies. Some of these specifically seek to mitigate the risk of extreme market downturns.
Returns might not be as high for these strategies during bull markets, but that is more than offset by the potential benefits of missing the worst effects of bear markets. As I tell clients, we would like to see your investments progress toward your return goals with the least amount of risk possible. There is also a behavioral-finance benefit to this type of approach. People, I have found, are just not wired to make rational decisions in times of market stress. A risk-managed investment approach will increase the odds of a client staying with their investment plan over the long term.
I take a very active role in developing portfolio allocations, selecting specific strategies, and then monitoring portfolio performance. My philosophy is that the investment world has changed substantially over the past two decades or so due to changes in market structure, information flow, technology, and the availability of sophisticated strategies for everyday clients. My clients will benefit, I believe, from a modern investment approach that uses multiple asset classes, highly diversified strategies, and a focus on risk management.
Uncovering life values to inform financial planning
Larry Wall of Six8 Advisors in Hoover, Alabama, runs a fee-based, holistic financial-advisory practice that is oriented toward the financial-planning needs of multiple generations of families. He says that while a quantitative and analytical approach to planning is critical, “it all starts with a discovery process that uncovers family members’ values and aspirations.” He has interactive discussions early in the process that focus on four key areas:
- Life history: How have you arrived at where you are today—including life-changing events or defining moments?
- Life transitions: How will changes that you are currently faced with or expect to take place impact your life goals?
- Life principles: What are the values by which you make important life and money decisions?
- Life goals: What would you like to have, do, or be during the rest of your life?
Larry Wall is a financial advisor with Six8 Advisors, LLC, located in Hoover, Alabama. He says he seeks to “motivate and assist clients as they create and implement a comprehensive plan for their investments, their finances, and often their business.”
Mr. Wall has been helping families and institutions with their financial management since 1981. He worked for 16 years as a trust and estate planner with several major financial institutions, where his experience included trust administration, estate and financial planning, and asset management. During the culmination of Mr. Wall’s banking career, he was the senior vice president of the Charitable Funds Management Group for Wachovia Bank in Virginia. He has been an independent financial advisor since 2003 and joined Six8 Advisors in 2015.
A graduate of Mississippi State University, Mr. Wall believes in furthering his knowledge through continuing education. He attained the professional designation of Chartered Advisor in Philanthropy (CAP) in 2004 and completed the certification process to be a Certified Financial Planner (CFP) professional in 2015. He also completed a three-year course of study at the Southeastern Trust School at Birmingham-Southern College.
Mr. Wall has been married for 32 years, and he and his wife have one son. He and his family enjoy the outdoors, especially hiking and camping. Mr. Wall has coached his son’s baseball team and, an Eagle Scout himself, has been a leader for his son’s Boy Scout Troop 5, sponsored by Christ Church United Methodist. He is an active supporter of the March of Dimes and is a member of the Financial Planning Association and the International Association of Advisors in Philanthropy.
Disclosure: Securities offered through Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, and investment advisory services offered through Cambridge Investment Research Advisors, Inc., a registered investment advisor. Both are wholly-owned subsidiaries of Cambridge Investment Research Group, Inc. Six8 Advisors, LLC, and Cambridge are not affiliated.
Photography by Lynsey Weatherspoon