Guiding clients along a prudent financial pathway
Guiding clients along a prudent financial pathway
I grew up in San Antonio in a close-knit and supportive family. My parents struggled to make ends meet when I was young, but our financial situation improved when my father became a USDA food inspector and my mother found a civil-service position. No immediate relative of mine had ever gone to college, and I saw that as the key to my future. I worked hard in school, got good grades, and was the commander of our school’s ROTC unit. I was accepted at several service academies and chose to go to the U.S. Military Academy at West Point.
That was an incredible experience and taught me lifelong lessons about leadership, teamwork, self-discipline, and having the confidence to calmly deal with stressful situations. I served on active duty for 10 years and had postings in the U.S. and abroad, including one where our unit helped protect the Alaska pipeline. I completed U.S. Army Ranger School and other specialized training and was a captain by the time I left the service. I thought that I wanted to be a teacher and completed my master’s in education at Old Dominion University while I was still in the service.
I was disappointed by the types of teaching jobs available in my area after I finished student teaching. I feel fortunate to have had the opportunity to join MetLife’s financial-services group in their management-training program. I spent about 17 years with the firm, interrupted by an almost yearlong sabbatical during which my family lived in Uganda on a missionary assignment. We helped build a school and orphanage there, and I taught Bible study to adults and children, making good use of my teaching degree.
My time with MetLife was very rewarding in terms of my personal growth as an advisor and having the ability to serve clients. I knew that I wanted to become an independent financial advisor and obtain the designation of Certified Financial Planner (CFP)—to be able to offer clients a more holistic planning experience. I went independent in 2011 and was registered with ING, which later became Voya. I ultimately set up my firm as a registered investment advisor and now offer clients a wide range of services, including planning for retirement, Social Security claiming, college funding, insurance, and investments. In addition to being a CFP professional, I have earned the designation of Certified College Planning Specialist (CCPS). I am also very interested in the area of financial protection for seniors and am a member of the Peninsula Task Force on Aging as well as the York-Poquoson Social Services Forensics Team. I am currently studying to become a Certified Fraud Examiner and a Certified Divorce Financial Analyst.
Our firm’s process is consistent with the principles articulated in the CFP training. Importantly, our firm acts in the best interest of the client at all times when providing financial advice. Our process starts with asking many questions, listening carefully to our clients’ needs, and understanding their financial situation. I want to answer a two-part question: What do they believe is most important to their immediate situation and their financial future, and what are they overlooking or not recognizing that could also be extremely important? At this point, I conduct rigorous discovery, followed by a goal-setting discussion. This is where I need to probe quite a bit, as people have trouble articulating goals in a formal sense. I approach that in several different ways, giving practical examples of potential outcomes.
After we nail down the financial objectives, I conduct a thorough analysis of the client’s situation and start to formulate actionable recommendations. I believe in identifying different approaches to help clients work toward their objectives. Every recommended course of action has its own unique benefits and potential pros and cons. I identify what I believe is the most suitable approach from a purely analytical perspective, but that does not always mean it is the one the client will be the most comfortable with. Perhaps we will end up with a combination approach or the client will opt to go with approach A or approach B. In any of these cases, the recommendations will represent a course of action that helps them move toward achieving their objectives.
A good example of this is when clients have an option within their retirement plan to select a lump sum payout—but by doing so, it will reduce their monthly payout over time. Another example is considering the many Social Security claiming strategies available to a client or client couple. I can identify the purely financial “best” option, but that is not always the one that fits best with a client’s mindset and comfort level. So, I educate clients about different reasonable courses of action and we come to a meeting of the minds.
After thoroughly assessing a client or client couple’s objectives and risk profile, I can develop a well-defined road map for achieving their goals. I encourage clients to communicate with me at any time and conduct a semi-annual review to evaluate their progress toward their goals. I provide ongoing consultation to help clients adjust their plan when their needs or life situations change.
As an independent advisor, I have the freedom to select any manager or investment that meets our clients’ objectives. Risk means something different for each client, and I spend a good deal of time probing attitudes around risk and exploring different types of market scenarios. Portfolios are designed to meet each client’s objectives in a way that is in line with their individual risk tolerance.
Semi-annual reviews and periodic rebalancing assist in prudent decision-making. I want to carefully balance risk exposure while seeking competitive performance. While managing risk does not mean avoiding risk, it does mean employing risk-management tools that can mitigate the dangers of declining markets. Having well-diversified portfolios is a key to managing risk, as are investment approaches that can be responsive to changing market conditions.
Having seen all kinds of market conditions over the past 25 years, I believe that most clients are much better off over the long run with a moderate investment profile. Taking on a high degree of risk might work for a while, but when the market suffers a severe decline, investors who are more aggressive may require a very long time to recover. The moderate investor will likely have a smoother ride in the market and the mathematical benefit of avoiding steep portfolio drawdowns.
The direction for a client’s portfolio allocation is driven by their risk tolerance, financial goals, time horizon, and other factors. It is not uncommon to employ both active and passive strategies for a client. I often use a bucket approach to planning where I segment the investment strategy by time frame—short, intermediate, and long term—with risk exposure and return potential dependent on the bucket. For the actively managed portion of a portfolio, or perhaps the entire portfolio, I will use the services of a professional money-management firm. One manager I use offers a variety of risk-managed strategies that I can incorporate into portfolio models that are appropriate for any given market regime. They also offer a tool that allows clients to assess their investment progress versus their own portfolio objectives, not an arbitrary market benchmark. This manager’s philosophy fits well with our firm’s—seeking moderate gains over time while mitigating downside risk.
I believe they see our firm as the quarterback for their total financial-planning needs. My objective is to develop a strategy that helps clients to be successful in reaching their goals. When necessary, I will hand the ball to another trusted professional that is best suited to assist our team for a specific client need. My ultimate goal is to provide affordable and quality financial advice to everyone.
On our website, there is a verse from the book of Psalms that refers to guiding one along the best pathway for their life. That was the inspiration for the name of my firm and something I take to heart. There are multiple paths that any client may take in their financial life. I am there to help guide them in making prudent and effective choices.
Financial organization tips add value for clients
Oscar Alvarez is an independent financial advisor and the founder of Pathway Financial Planning. He says that organization is an important component of any client’s pathway to a healthy financial life. When working with clients, he offers guidance for systematically organizing key documents and records in the following areas:
- Income-tax planning.
- Investment planning.
- Credit and debt planning.
- College planning.
- Retirement planning.
- Insurance planning.
- Estate planning.
- Health-care records.
- Key personal documents/online security.
- Professional advisors/service providers.
If formal risk-management strategies provided a demonstrable advantage versus passive strategies during the COVID-related decline of 2020, why is that story not coming out? And if there was no advantage, what does that mean for active risk management? [dropcap...
idelity issued a note for clients on June 17, 2020, which outlined a cautious yet largely optimistic view of improvement around the world on economic conditions—and the continued need for risk management in...
Back on March 19, I wrote the article "Stock Market Showing Another Example of ‘Rogue Wave’ Behavior." Figure 1 (from June 11) is an updated version of the chart from that article. The only change is that three more months’ of price data for the Dow Jones Industrial...
James Bales, RFC, LUTCF • Newport News, VA James Bales Financial LLC • Centaurus Financial Inc. or the first 10 years, our firm extensively used financial education seminars for the public, especially...
Oscar Alvarez is an independent financial advisor and the founder of Pathway Financial Planning. He has significant experience in the areas of financial planning, insurance and risk management, investment and tax planning, retirement planning, college-funding planning, and estate planning. He says his overall mission is to help clients “determine what the best path is for them to reach their financial goals.
Mr. Alvarez was born and raised in San Antonio, Texas. He was focused on academics in middle and high school and was commander of his high school’s ROTC unit. His goal was to become the first member of his family to attend college, and he was accepted to four of the nation’s military academies. He chose to attend the U.S. Military Academy at West Point, where he graduated with a bachelor’s degree with electives in military history.
Mr. Alvarez spent 10 years on active duty stationed at U.S. and overseas bases. In that time, he completed specialized training, became an Army Ranger, and achieved the rank of captain. During the latter years of his service, he attended Old Dominion University, where he received a master’s degree in education.
Mr. Alvarez joined MetLife as a financial advisor in 1993, where he worked for close to 17 years. He and his wife took a sabbatical to help build a school and orphanage in Uganda with the Rafiki Foundation. Mr. Alvarez also taught Bible study to children and adults. He was an independent financial advisor with ING, which later became Voya Financial, for three years. He founded Pathway Financial Planning in 2011 and is a Certified Financial Planner (CFP) professional and a Certified College Planning Specialist (CCPS). He was recognized in 2011 as a Hampton Roads Five Star Wealth Manager.
Mr. Alvarez and his wife live in Hampton, Virginia, and have two adult sons. Mr. Alvarez is actively involved in his church and is an advocate for missionary organizations. He is a member of the Peninsula Task Force on Aging and of the York-Poquoson Social Services Forensics Team. In his spare time, he enjoys reading and working on home improvement projects.
Disclosure: Securities and investment advisory services offered through Pathway Financial Planning Inc., a registered investment advisor in the state of Virginia. Insurance products and services are offered through Pathway Financial Services. Pathway Financial Planning Inc. and Pathway Financial Services are affiliated companies.
Photography by Don Monteaux