Happy Families Enjoy Financial Success
With new policies and uncertainty over tax reform on the horizon under the new Trump administration, the next few months are a great time for people to review and possibly revise their current estate planning. Just because most people don’t have to worry about the estate tax per se doesn’t mean estate planning isn’t an important part of overall financial planning, according to a California wealth manager. That’s just one aspect of how Peter I.M. Shusterman protects his clients.
Shusterman, founder and wealth manager of Shusterman Wealth Management, based in San Diego, California, says he’s exactly where he wants to be today, because his passion is serving clients. His own background contributes to his philosophy. Because of his parent’s business, he grew up mostly overseas, and didn’t come to live in the United States until college.
“Growing up in various cultures, I was always fascinated as why some people can be happy and joyful while others struggle and are stressed,” he recalls. “I discovered happy families enjoy financial success, mostly due to having a disciplined approach to managing finances. That insight was a seminal, Aha! moment, and it drove me to financial planning and wealth management.”
Later, when studying investments and financial planning, Shusterman realized he loved economics and markets.
“It was like putting puzzle pieces together,” he said.
A Holistic Approach
At Shusterman Wealth Management, where there is a $500,000 minimum for their services, the firm stresses a holistic, comprehensive approach. Since all aspects of life touch upon money management, one decision affects others.
Shusterman notes that the subject of money intimidates most people.
“It’s a common family taboo subject. Most families spend more time planning their vacations over the course of a year than managing their finances,” according to Shusterman, adding that’s why proper guidance is important. “It’s really helpful to have clear, structured advice – that’s what we do here.”
Shusterman understands that most people get confused with financial jargon, and want something simple and clear that they can understand. His firm stresses discipline and structure. Every client receives a written plan, which incorporates where they are now and where they want to be.
“It’s our roadmap – a critical tool,” he says, adding that statistics and money management theories are useful tools for advisors, but creates create unneeded complexity for the client’s decision-making process.
Gamifying is Limited
When asked about current online financial trends such as robo-finance and gamifying, Shusterman replies that while the trend is here to stay, gamifying in particular is quite limited.
“Planning is a collaborative exercise, the experience of navigating the maze of input and making sense of all the choices can’t be fully analyzed by an inanimate object,” he says.
A computer doesn’t take emotions into account, and those are often key to many of life’s critical decisions. As for robo-investing, it lacks insights into today’s non-tech influences. Though Shusterman concedes that robo-investing is helpful, but “not the end-all for everyone.” Brett Tomlinson, a financial advisor at Shusterman Wealth Management, believes some online tools are useful for new, young investors, but those tools look at a very narrow scope of someone’s financial position.
Preparing Clients for Longer Lives and Longer Retirements
With the pace of modern medical advancements and people’s desire for healthier lifestyles, money managers need to plan for nest eggs for a longer stream of financial support.
“It’s important to have many choices, many arrows in the quiver,” according to Shusterman.
Those arrows must take into account all the possibilities of economic and financial market cycles, along with asset protection, long-term planning, tax minimization planning and heir planning, of which the latter is an essential component, says Shusterman.
“There are a lot of tools we use. One size doesn’t fit all. We look at all possible solutions to figure out what is most appropriate for our client’s circumstances,” he said.
Tomlinson added that to ensure retirement planning will last, they take a further-out approach. That includes looking at family history and longevity.
“If appropriate, we move a client’s plan from age 85 to 95 or 100. These are tools we utilize so people will have assets and income if they happen to live that long.”
They run those calculations and projections through their software.
Says Shusterman, “On academic and statistics basis, we know the probabilities are as high as they can be. We use analytics, but we also use different products as solutions.”
Right now, most people in their prime working years no longer have pensions, and Tomlinson points out that what was available for one generation is not available for the next generation.
“That’s another consideration to take in, whether or not they’ll have that additional source of income,” he said.
The DOL Fiduciary Rule Impact 
The Department of Labor’s (DOL) new fiduciary rule has had its final compliance date delayed, but it is still having an impact in the financial planning industry. Shusterman says it’s a great area of controversy right now, and suspects that will continue as the public becomes more aware of it.
“From a legal perspective, we think of a fiduciary as a person whom another person places trust and confidence in and relies on that person for appropriate advice. We think of it in terms of the relationship to the people we serve,” he explained.
For Shusterman Wealth Management, it means doing the right thing and putting the client’s interests above their own interests. The new regulations are trying to put a basic requirement on what constitutes best interest, such as full disclosure and the impact of that advice.
“The regulators are trying to remove conflict, specifically in terms of compensation. If advice is given, compensation should not come from a third party,” Shusterman said. “In terms of the DOL regulations, the biggest thing is the industry needs to go through is the separation of financial compensation. When you are a money management firm and designing products, you put too much effort in considering what your competitors are doing, so you structure products based on compensation, which of course muddies the choices. We need better standardization in fees and compensation. That’s key.”
Shusterman is also concerned that the new regulations will limit availability of giving advice to everyone.
“In the past, we were able to give advice to almost everyone. I think the danger of the new regulations is that the so-called fiduciary standard will limit advice. I don’t know what the solution is – there has to be a balance. It will be trial and error, evolving over time, with the rules constantly changing,” he said.
An Agreement is Everyone’s Responsibility
Like many financial advisors, Shusterman concedes that most clients don’t read the prospectus.
“The issue is a delicate balance between those who understand the law and write rules based on law, and people who have to live with it. The general population is not educated for that. The language attorneys use is very specific, and new rules are equally confusing to the old rules. The job of the advisor is explaining things in a way that can be absorbed by a person and make sense to them, which happens to be something I love doing,” he said, adding that he doesn’t know if that is possible to regulate, as speech is a variable thing, based on deliverer and receiver. “I don’t know if there could be a standardized approach for that.”
Tomlinson says it is everyone’s responsibility to know what their agreement is with their money manager, advisor or client. It is the responsibility of the fund manager to relate that to the advisor, and the advisor must understand what the agreement is with the fund manager and how it affects the client.
Ultimately, everyone needs to be on the same page with the execution of a particular strategy,” said Tomlinson.
Who Do You Serve?
When asked what questions a person should ask a prospective financial planner, Tomlinson said the first order of business is determining whether the individual is a money manager or financial planner, and how they are compensated.
“Understand how will they be paid and where that comes from. Those are important considerations for clients to understand,” he said.
Shusterman recommended asking who the planner serves the most, to figure out if the person has special insights and understands the needs of groups of people they serve.
“I’d like to know their philosophy of money management, what money represents, and their appreciation and understanding,” he said.
As far as their own mission and service, Shusterman said simply, “I’m trying to improve the lives of people that we touch.”
To learn more about Shusterman Wealth Management visit: shustermanwealth.com
