The oil and gas industry is frequently making headlines. After all, it is one of the world’s largest industries. One trend has been simmering in the background over recent years, however. Though not hot enough to make the crawler running across the bottom of cable news shows, it is still nearing its boiling point. The industry is facing a talent shortage. Over the next five years, projections see U.S. employers losing 50 to 80 percent of their workforces who are eligible for retirement, according to the 2014 Mercer Energy Sector Report.

For years, Multop Financial, based in Bellingham, Washington, has been helping people who work in the oil and gas sector prepare for retirement. As a fee-based financial advisory firm, this niche expertise sets them apart from other wealth management firms in the region and even across the Pacific Northwest – especially in the eyes of their clients.

“Whether they are general laborers, in management, or executives, there are a lot of similarities in the types of investment plans and retirement plans they have,” explained Tyler Ryan, Executive Director of Financial Services and an equity partner of Multop Financial. “We are able to hone in on specific needs they have as a common group, and that allows us to communicate with them more effectively.” Ryan pointed to investment styles, behaviors, political views and social issues as examples.

Multop Financial’s staff of 11 includes three CPAs with master’s degrees in tax law and expertise in various retirement plans offered by major U.S. energy companies. “These plans are very complicated and have different tax ramifications,” explained Phillip Multop, Executive Senior Advisor and founding partner since 1976.

In managing investment portfolios, Multop Financial’s key objective is to reduce volatility and risk. The act of chasing returns is contrary to their approach, especially for those clients in or near retirement.

Time is spent educating clients on financial concepts and investment approaches, and the care they take in doing this contributes greatly to a successful client experience. For instance, most clients aren’t familiar with the different types of risk and the different impacts they pose on a financial plan. “We feel that helping educate them about their investments and the difference between risk tolerance, risk capacity and risk perception is very important, in order to make sure that we have a successful relationship with those clients,” said Ryan.

Acting in the best interests of the client is at the foundation of the Multop Financial business model. As the Security and Exchange Commission wrangles with the passing of legislation to enforce a uniform fiduciary standard legally requiring broker-dealers to adhere to the same standard that financial advisors currently use, Ryan questions whether stock brokers have an understanding of what the true obligation of being a fiduciary actually entails. 

“Before our industry requires that standard across the board, I think that we should spend more time implementing strict standards as to who can even join our industry,” suggests Ryan. He points to CPAs and lawyers as examples of professionals who must complete four years of college at minimum – yet in the financial industry there is no such standard. “I wonder why that is. Clients’ assets are just as important, if not more important, than their accounting or legal management,” he said, emphasizing that he is not referring to registered advisors, who are operating under SEC or RIA standards.

In the spirit of equal time, Multop presents the point-of-view of the brokerage industry, which posits that the SEC should not try to redefine their industry, but instead focus on educating investors on the difference between a broker and an investment advisor. “Not all consumers are looking for a broker to do the same job as an advisor – one is sales, one is service,” said Multop.
“Anything that raises the ethical bar has to be good for the industry as well as the consumer,” concluded Multop, adding that there is no way that a broker can serve both a client and a broker-dealer at the same time, as it is a conflict of interest.

“The fee-based or fee-only structure for advisory firms is only going to become more prevalent over time. It has already had a dramatic shift in the industry. It’s the method that puts the advisor and the client on the same side of the table,” said Ryan.

What if an investor sits at the table with a computer searching online for a virtual advisor or robo-advisor? While such services are gaining popularity, these online tools that attempt to replace warm relationships with cold algorithms may suit the needs of some people, but according to Multop, it’s a very small percentage of investors. “Clients still crave human interaction. They don’t want to interface with a computer, they want to talk to somebody and look them in the eye,” he said.

Software algorithms are only as good as the program that they are written in, and the conditions they are written under. Algorithms must be maintained in order to be in accord with market changes, according to Ryan. “If the algorithm that runs the robo-advisor’s program isn’t properly modified, then you could have a very disastrous outcome for someone,” he said.
Multop Financial is a Registered Representative offering securities through Cetera Advisors, LLC, an independent, registered broker-dealer and Registered Investment Advisor. “

For more information, visit: www.multop.com