The only way I would tell someone to find an advisor is through the people in your life that you trust and admire. They will have advisors they work with and have an understanding of what kind of advisor they work with and the experience they are having, this is the best method by far. It means you start with someone that has proven themselves and creates less of a blind dynamic when selecting someone. You want to, of course, interview them and make sure they are a good fit but a referral into an advisor is the ONLY method I would suggest to someone. You are trusting that person with the most personal things in your life so who you pick is so important. – John McCarthy
As part of our series about what one should look for when hiring a financial planner or adviser, I had the pleasure of interviewing John G. McCarthy, III, a financial planner and partner in Heritage Financial Consultants. John focuses primarily on financial planning and investment management programs for high net worth clients. John has been a financial planner since 1993 when he joined Lincoln Financial Advisors. Within Lincoln Financial Advisors, John has been listed on the top 100 advisors list for many years now. Since 2010, he was listed in the top 40 of Lincoln’s Top Financial Advisors nationally. John has been featured in WORTH magazine for 2012–2014 (a premier financial publication) and recognized in 2017 as a top advisor by SmartCEO magazine. John offers securities and advisory services through Lincoln Financial Advisors Corp., Member SIPC, a registered broker-dealer and a registered investment advisor. Lincoln Financial Advisors is not affiliated with Heritage Financial Consultants. Lincoln Financial Advisors and its representatives do not offer tax or legal advice. CRN-2873139–121619
Thank you so much for doing this with us John! Our readers would love to ‘get to know you’ a bit more. Can you tell us a story about what brought you to this specific career path?
I had always been interested in finance and two of my sisters had married Investment Bankers, so their stories interested me about finance in general. When I graduated and Europe was in a deep recession, I decided I wanted to look for an opportunity in finance in the U.S. I had a good meeting with a friend of my fathers at Alex Brown in Baltimore, and then by chance an alumnus from my college that was in the financial planning arena. I decided to begin my career in financial planning and 26 years later I’m still enjoying this incredible profession.
Can you share a story about the most humorous mistake you made when you were first starting in the industry?
When I started, I went back to people I knew at the college I attend and approached professors about doing some financial planning for them. I met with one professor who, at first, did not seem like a good client to work with based on his assets. He had paid off several mortgages on two properties and all of his savings went to the school retirement plan. I had made a snap decision this was not a good fit and wrapped the meeting, thanking him for his time. One week later, he called me to say that he wondered if I could help him with a shoe box he had forgotten about, his father had given it to him as part of their estate. The shoe box was full of stock certificates, and he was curious if it was worth anything. I was a little reluctant and sort of thought it a waste of time and energy to do this but concluded the right thing to do was to help him. After I pulled A LOT of certificates out of this large shoe box, and spent a lot of time figuring out how he could deposit them and find out the value, I was stunned to discover he had almost a million dollars in stock certificates. He was stunned and we began the process of getting these into an account for him. He instantly became my largest client!
Can you tell us what lesson or takeaway you learned from that?
I think the lesson learned here is to be careful not to judge someone or a situation because you may be completely wrong. My choice to do the right thing would turn into a great client relationship and numerous referrals to his colleagues and friends that loved this story and heard all the good work I had done for him. Just like that as a young advisor, I had the beginning of a thriving practice with people taking a chance on a very young man. If you do the right thing usually things will always work out.
Are you working on any exciting new projects now?
As a Partner at Heritage Financial Consultants, we are constantly trying to enhance the client experience and to provide an unparalleled level of service and oversight. We are currently working on the digital and web-based experience by allowing clients to access their accounts with us on a digital platform. The platform we provide access to allows them to pull outside accounts, bank accounts, real estate, etc. in a real-time manner by linking them to the platform. A nice feature that has been well received is the vault that stores client’s legal documents, passports, social security cards, etc. in a secure digital format. They can now see all of their accounts and total net worth in one place, access all of their critical documents anywhere they are and see all of our reports and analysis at the push of a button. On our investment platform through Fidelity Investments (Institutional), we are also trying to enhance the investment strategies and portfolio model designs as we enter 2020. After this historic Bull market, we are trying to better manage risk for our clients as the new year begins.
How do you think that will help people?
As technology continues to enhance the client experience, people want to see their entire net worth at a click of a button with real-time figures. Clients want to see how their accounts are doing day -to — day and have a way to access critical documents anywhere they are, this is of great value to them. Clients find it valuable to that we have the ability to link up their mortgage data, their bank data and any outside accounts, including downloading their spending and folding that into a budget tracking history. Access to all of this information will allow clients to see a more accurate analysis that will help them make better decisions and plan for retirement and other life events. Concerning the portfolio models, we are trying to better manage risk while not giving up potential additional upside in the equity markets. This is a historical bull market and we are trying to protect our clients for when the market will eventually go through its next Bear cycle.
Are you able to identify a “tipping point” in your career when you started to see success?
Yes, for me it was the first Bear market in my career, which was the technology bubble of 2000–2002. Many people had chased that market and watched as a large portion of their wealth vanished, they were looking for advice and guidance on how to sort through the wreckage. I had a significant on-boarding of clients during this time and it was a major tipping point in my career. In reality, people value advice and guidance during negative market cycles more than during Bull market cycles and holistic advisers like myself flourish in those difficult times. In general, a good advisor will enhance anybody’s overall plan by guiding them to make good decisions in good and bad market cycles without the emotional attachments that human beings have to their money. Those emotional decisions usually have devastating effects on their portfolios and overall plan over time.
Did you start doing anything different? Is there a takeaway or lesson that others can learn from that?
No, I didn’t have to start doing anything different. The key for most people is to manage risk and understand the amount of risk they need to take to achieve their goals. My clients are not chasing returns or trying to get rich off of their portfolios through following fads or trends. They are trying to secure a rate of return that will get them to retirement and through retirement with a risk tolerance that allows them to stay the course in negative markets cycles. During the late stages of bull markets, people tend to start buying equities because they may not have participated and feel they missed out, this herd mentality approach usually indicates that a bull market is coming to an end. By keeping clients in a consistent portfolio, they will nearly always outperform anybody running in and out of the markets. Above all, manage their risk profile and stay consistent.
What three pieces of advice would you give to your colleagues in the finance field to thrive and avoid burnout?
- Hire a great team so you have very talented people working for you that can handle the day to day service dynamics with clients. A successful advisor surrounds themselves with talented people and they focus more on the clients, which is the priority.
- Do not get caught up with the performance discussion with clients but stick to managing risk for them and have them buy into the process. Stick to the big picture risk analysis for their portfolio because clients that follow that path will generally be happy they did in the long run.
- Find balance in your life and enjoy other hobbies. Also, try and take one day a week off to be able to do something you enjoy and allow yourself to decompress. It’s very challenging to be an adviser in many ways, so staying focused and balanced in your own life so you can be the best adviser to your clients is important. I preach this as well to my clients, encouraging them to travel and do the things that bring them joy because in the end that helps them stay centered in their own lives. I also find that they appreciate that perspective from their advisors.
Can you give a story or example?
After the Financial Crisis, I found myself extremely stressed and had no balance in my life. The toll of that bear market and being there for my clients, holding their hands through that time, was extremely draining. While I am a very upbeat person, the barrage of negative news from various cable outlets and in the newspapers daily even had me doubting whether I was giving my clients the best advice, and it was a difference this time. As I said it took a toll on me. However, I was firm with my clients and even parted with a few that were determined to go to cash and not stay the course. I felt strongly that was the wrong move, I told them I could not be their advisor if they made that decision. I did part ways with a few clients but in the end, all those clients that listened to me appreciated greatly that advice and created a strong bond between us. By staying the course and avoiding the terrible mistake of going to cash they were able to fully recover and continue to thrive as the bull market began. What I realized after the crisis had passed was the importance to find a balance in my life and trust more in my team to handle some day to day elements of the practice. That shift has been good for me, my family and my clients. I think finding that balance for every advisor is so important.
Ok. Thank you for all of that. Let’s now move to the core focus of our interview. As a “finance insider”, you know much more about the finance industry than most consumers. If your loved one wanted to hire a financial advisor (not you :-)), which 5 things would you advise them to find out about before committing?
I cannot offer five things, for me the only way I would tell someone to find an advisor is through the people in your life that you trust and admire. They will have advisors they work with and have an understanding of what kind of advisor they work with and the experience they are having, this is the best method by far. It means you start with someone that has proven themselves and creates less of a blind dynamic when selecting someone. You want to, of course, interview them and make sure they are a good fit but a referral into an advisor is the ONLY method I would suggest to someone. You are trusting that person with the most personal things in your life so who you pick is so important.
Can you give an example or story for each?
All the clients that come to me only come from current clients or from lawyers and CPAs I have worked with over the years. So, when I get a call it’s a very comfortable discussion and most of the time the person referring is calling me to ask if I am taking on clients and gives me an overview of the client. When I do meet the referral, it’s usually very comfortable as they have heard a lot about me and my process and I already understand what they are looking for in an advisor. That initial contact almost always leads to a very seamless transition into our process and ultimately to me developing their plan and becoming a client.
I think most people think that financial advisors are for very wealthy people. This is likely not actually true. Can you explain who would most benefit from hiring a financial advisor and why?
I think anybody benefits from an advisor. The reality is, if you are a holistic advisor you are covering all aspects of someone’s life (Tax, Legal, Risk Management, Investments, Retirement Planning, etc.). Everyone benefits from someone guiding them to make the appropriate decisions for themselves and their families.
Can you give an example?
I began working with a couple that both finally got through all of their training and completed their residency before they started working for their respective private practices. They had a lot of Medical School loans but finally were able to save money and they wanted to develop a plan to tackle their loans, save for retirement and get their legal documents in place. We worked together to build the framework of a plan and over the years rounded out their plan with risk management (insurance), setting up college funds for their kids and better managing their tax picture. Now, 21 years later, their children are in college and they are on target to retire early as they had wanted to do when we met 24 years ago. We have made tweaks to the plan along the way but we have also made good decisions and they have watched their plan evolve. It’s very fulfilling as an advisor when your clients appreciate all the guidance you have given them that has allowed them to achieve all their goals.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are?
This is so true and I have several people that guided me over the years. The first person is the person that encouraged me to get into financial planning out of college and relayed what a great profession it was. He was very convincing that this is what I should be doing as a career and supported and encouraged me as I looked at several other options. Once I started working, I was fortunate to team up with several senior advisors that helped guide me in one way or another by teaching me and going out on meetings with them to experience firsthand the interaction with potential and current clients. Over those years, I learned many important lessons and I slowly developed my own style and approach with the clients. I have been blessed to have worked with some of the best advisors in the industry and I have tried to soak up as much as I could from them to make me the best advisor I could be.
Can you share a story about that?
As described, there are several people but the first step was my interview process out of college and the guidance and personal touch I was given in that interview. I really felt that this person saw something in me and really felt that at 22 I had enormous potential, even though I had grown up in Europe and had no natural market in the area or the U.S. That support and encouragement from that interview, to my decision to give it a go, to all the years along the way as I grew into a better advisor was very monumental to me. I think whatever path anyone chooses, it’s how they start and the mentors and people that help you along the way that offer the major milestones in someone’s career.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.
I have thought about this many times, and I think teaching kids the basics of budgeting, saving and being aware of things that will help them be successful in life at a young age is extremely important. Starting at a young age is key. I would like to find a way to give back through programs that offer that kind of financial guidance and help kids achieve their goals.