One of planner Marilyn Capelli Dimitroff's favorite client stories has nothing to do with investment advice. An attorney with whom she'd worked introduced her to a client who was selling a business to her partner, she recalls. The client had inherited her half-ownership several years earlier and never enjoyed the work, preferring to pursue a career as an artist. The attorney and the client were reluctant to put a price on the table without knowing what the client would need to maintain a reasonably secure lifestyle.
"I was brought into the decision and worked with the client to determine the present value of her lifetime needs. The client then had the clarity and confidence to negotiate a sale price that exceeded this target. She is now much happier, financially comfortable and immersed in the art community in her hometown," Dimitroff says.
The story illustrates what Dimitroff, president and sole owner of Capelli Financial Services in Bloomfield Hills, Mich., has long believed the planner-client relationship should be. She doesn't see the relationship as a hierarchy, one in which an advisor takes inputs from a client and hands back an investment plan. Rather, she sees her relationship with her clients as a partnership.
SAME SIDE OF THE TABLE
"I used to think financial planning was all about good advice, about being knowledgeable. Today, I see myself on the same side of the table as my clients, helping them make good decisions," she says.
She does, of course, have plenty of quantitative ability she can bring to the table, with both a B.A. in mathematics from Michigan State University and an M.A. in math from Eastern Michigan University. But she still places a lot of weight on a client's own view of investing. "I work with really bright, capable people," she says.
Over the years, her clients have included business owners, medical professionals, advertising executives and university faculty, as well as near or new retirees. She currently manages $275 million in assets for 190 clients.
Her staff of seven includes five professionals who have either a CFP or a CFA, or both, as well as one Chartered Market Technician. As sole owner of the firm, Dimitroff has started working on a compensation and succession plan that ultimately entails an employee buyout of the company.
Dimitroff started out in the brokerage business in the late 1970s, obtained her CFP credentials in 1982 and launched a financial firm with another woman, operating as an independent RIA and independent broker-dealer in Chicago. In 1995, she opened Capelli Financial Services.
When she first went solo, she decided to become more involved with the CFP Board. Dimitroff became a member of the CFP Board of Standards in 2004 and was elected chairwoman of the board in 2009. From 2006 to 2007, she chaired the task force to revise the CFP Board's standards of professional conduct and helped craft the definition of the term "fiduciary" for CFP certificants.
As chairwoman, she remained committed to open communication e between the board and certificate holders. In one year alone, she and the CFP Board's CEO at the time, Kevin Keller, held 17 Certificant Connection meetings around the country, traveling to different areas around the country and inviting all the certificants in the region to come together and share their achievements and concerns."I learned firsthand about how proud folks are of their certification," Dimitroff recalls.
CFP certificate holders now number more than 64,000, up from a bit more than 36,000 at the end of2000. This growth rate, which has far outpaced S&P 500 returns over the same time period, seems to square with Dimitroff's belief that Certified Financial Planners provide many needed services beyond investment advice.
Dimitroff says she learned long ago that, when it comes to the direction of markets, no one knows the future. She remembers vividly a time in the early 1980s when a client asked her where the market would go the following year.
"All the pundits said the market would continue moving sideways," Dimitroff recalls. "And this prediction came at the beginning of the biggest bull market in history."
Over time, this financial agnosticism evolved into her own Michigan-based investment metaphor of "engine and airbag," or growth and stability. As outlined in what she calls the "purpose alignment method," this strategy builds off a 60%/40% platform, with 60% representing the engine of growth through equities and 40% representing the airbag of stability through fixed-income instruments.
The growth portion of her model portfolio includes a large core equity component comprised primarily of large U.S. companies, followed by small U.S. companies, foreign developed markets and a lesser amount of foreign emerging markets. Exact percentages of these buckets depend on the needs and risk tolerance of each client.
Dimitroff devotes a little piece of the growth portion to dynamic equity positions with a shorter holding period, including everything from commodities and REITs to gold, energy securities and high-yield bonds. These investments are attractive because they are undervalued, have momentum potential or mitigate risk in other areas of the portfolio.
The stability portion of the portfolio is primarily in traditional bonds (high-quality, shorter duration) with a slice of inflation-protected bonds and a sliver of nontraditional strategies such as arbitrage funds and currency funds. Dimitroff reduces internal costs through the judicious use of ETFs, as well as Dimensional Fund Advisors and Vanguard funds (some active, some passive). While she believes in value investing over the very long term, she takes no position regarding value and growth in the short term.
ADVICE TO NEW CFPS
Spare in her unsolicited advice to clients, she is willing to share a few thoughts with planners just entering the business. Her first piece of advice: Don't be afraid to ask your clients questions, and don't be ashamed to seek advice from other professionals. Her second piece of advice: Find other planners with whom to form study groups and share as many ideas as possible.
Dimitroff has been part of the 12-member Capstone Study Group since 1996. The group meets three times a year, and she is still surprised at how generous member planners are in disclosing information.
"We share everything," she says, including business plans and even internal financial statements. Every advisor needs a close network, she says. "I would not be where I am without being part of Capstone."
Dimitroff believes the planning profession can be a very exciting proposition for people who are change junkies - wealth management tools change, securities laws change, the economy changes, clients change. Dimitroff says she is energized by change. "What I love about this profession," she admits, "is that it is never boring."
Jim Grote, a CFP in Louisville, Ky., writes regularly for Financial Planning.
Marilyn Capelli Dimitroff, Capelli Financial Services
Credentials: B.A., mathematics, Michigan State University; M.A., mathematics, Eastern Michigan University; CFP
Assets under management: $275 million
How I see it: "I used to think financial planning was all about good advice, about being knowledgeable. Today, I see myself on the same side of the table as my clients."