"I'm 67 years old and work 70 hours a week because I love what I do," says John Sestina, principal of John E. Sestina & Co. in Columbus, Ohio since 1965. Sestina, along with James D. Schwartz and Robert J. Underwood, founded the National Association of Personal Financial Advisors (NAPFA) in 1983.

Amazingly, during the market meltdown, Sestina avoided selling any equity positions in his retired clients' accounts and still attracts new clients, three just last month. "People want financial independence, not retirement," he says. "They want enough money to have options."

Deciding what constitutes enough money for his clients is tough. "Often, clients confuse financial means (investments) with financial ends (independence)," Sestina argues. So he gives them his "money-under-the-mattress" test: If a client needs an extra $250,000 to achieve independence, Sestina suggests that he or she save that amount and stash it under a mattress. When the client explodes, he asks what is more important, the embarrassment of a 0% return or the security of having $250,000 at hand? Such heresy, he says, separates true financial planners from those masquerading as planners. "If planning is only a code word for investing, why does investing only account for 20% of the CFP exam?" he asks.

Sestina believes the ultimate product a true planner brings to the table is peace of mind. With a clear goal, comprehensive planning-including business, tax and estate planning and more-always trumps "beating the market," he says.

MARKET-PROOF CASH FLOW

Sestina focuses on clients' cash flow worksheets to settle the big question: How much do they need to live? All else flows from that answer. Aging clients build a five-year reserve portfolio of laddered income. (Sestina noticed in the late 1960s that there was no five-year period in which the market went straight down five years in a row, so that became the worst-case scenario.) Say clients need $100,000 a year to live on. They'd invest $500,000 in the reserve portfolio. For year one, they'd stash $100,000 in money markets. For years two and three, they'd invest that amount in two-and three-year CDs. In years four and five, that amount would go into Treasury or high-quality corporate bonds that mature at the appropriate time (not bond funds). The emphasis is on liquidity, not return.

The laddered income portfolio assures Sestina's clients a timely return of principal. As a result, they're living comfortably on their cash flow reserves these days. When the market recovers, Sestina will replenish the $500,000 reserve with proceeds from the broader portfolio.

He invests the balance of client portfolios in diversified equity and bond positions using mutual funds. Sestina believes in the value of active management, using funds from Oakmark, Dodge and Cox, Selected American Shares and others.

ADVISING ON EVERYTHING

Sestina's reimbursement for services is strictly fee-only. He charges on a sliding scale based on a client's total net worth, including the value of a client's home and any collectibles he or she might have. "We charge on all assets because we offer advice on all assets, for estate planning purposes if for no other reason," he says.

His minimum fee is $5,000 for clients with less than $1 million and is negotiable for clients with more than $20 million. Today, he boasts 350 clients with over $600 million in assets.

He also mentors new planners through the Sestina Network of 25 planners, including a former NBA basketball player and two attorneys. He charges these planners a percentage of the fees they make from their clients.

Sestina loves the profession he helped create, and thinks of the bear market as a welcome weaning process, purging the planning profession of salespeople. He muses, "For insurance and mutual fund salespeople, these are not good times. But clients need comprehensive financial planners more than ever. When times are good, my business is good. When times are bad, my business is better."

Jim Grote, a writer in Louisville, Ky., contributes regularly to Financial Planning.