The Interview: Senior Market Advisor
Senior Market Advisor: What sets your business apart from the others?
Kim Magdalein: When Eric and I started a few years ago, I was not excited about a partnership. He helped me get excited about it. What happened is that we were deciding how we were going to build this strategy in dealing with seniors. What we did not want to do is be product salespeople. We talked about this extensively. We felt that if we would serve seniors properly and take care of them the way they needed to be taken care of, the way they wanted to be taken care of, we would ultimately make a very fine living. But we didn’t want that to be the driving force. We wanted to be able to help them first and the result of it would be that we would be OK with it.
That’s the way we started the business. We started with seminars. We had a few referrals from a CPA. We worked with a CPA and told him we wanted to narrow our practice to just seniors and do away with young people, anybody under 50. So he referred some business to us and we started seminars, and we started mailing directly to the demographics we wanted to work with and allocated a certain amount of money in the early days to marketing and we actually never got to spend it. We did real well.
SMA: So you have people you work with to complete the whole package?
KM: We recognized the fact that we could not be all things to all people. The next thing we did was find an attorney. We had to find more than one attorney. But we wanted to find an attorney we could refer to as far as legal matters were concerned because the discussions always went in legal directions during our fact-finding process. We would talk about succession planning: “What is going to happen with your money when you are through with it?”
They would say, “I want to do this and this and this.” We realized we were right on the edge of giving legal advice. What happened was that a number of people had blended families and special needs children and all types of things like that. We had to find attorneys who could help them and give them advice.
We started sitting down with the attorney and a prospective client and talking about the issues. We learned a lot about it. So, I’m probably about 80 percent proficient in the knowledge I need about these things. But, 80 percent is not good enough, and I think we need to be with an attorney at 100 percent so clients can know everything they need to know in succession planning.
We meet with the clients, with the attorney, and in some cases, even the CPA. We found with the attorneys that there were a lot of ways we could help seniors without having to buy insurance and they wouldn’t have to go to that expense. We wouldn’t have learned that without that holistic approach we’re trying to take to it.
SMA: So having access to the attorneys, having access to the CPAs, and your guys’ knowledge on top of that, is that what you consider the holistic approach?
KM: Yes. In my opinion, I think it borders on malpractice if you were trying to give someone advice that is outside of your field. But they need the advice. So, I think it is very important that you have a team. The team has to be able to work together. We work very closely with one attorney who actually opened an office in our building. In Florida, you can’t actually house with an attorney. He opened an office in our building so we can send folks to him. He sends folks to us.
We actually meet on a regular basis. When we are through talking to clients about money, sometimes we’ll send them right down the hall and they’ll talk about the legal issues. We’ll integrate everything so we’re all on the same page. The beneficiaries are the same on products as they are on their legal papers. We have to make sure that whatever the legal documents say, we have it correct on the financial documents.
SMA: Is this the way of doing business that people are going to have to practice or get left behind?
KM: Yes. If you are going to do it right, if you are an ethics-focused financial advisor, then you are going to have to take it into consideration.
SMA: What sorts of off-the-menu, non-financial services have you provided to clients because it is the right thing to do?
KM: We have a very close relationship with a home health care agency. The owner of the company called me. We do her planning for her. She said she had a client who was homebound and she was afraid there were some things going on with her money, that she was not going to be able to stay at home. I went out to see her and I found out there were several things going on. One, the neighbor was coming over and looking at her checkbook and trying to find out if she could help her pay her bills. I found her attorney and had him come in and stop this invasion from the neighbor. We were able to transfer some cash assets from another resource. I called in a reverse mortgage guy to find out about a reverse mortgage for her so she could stay home a little longer. We determined she was able to stay home for 10 months of full home health care at $12,000 a month. By the time it was all said and done, she stayed home for about five months. She passed away, but she never had to leave home. I was doing that for the home health care client. We didn’t get anything from that. But, fortunately, you get a good feeling about it. You can’t make money on everybody you want to help. But you can help everybody. You try to help everybody you can and it comes back to you. You send it out, it’ll come back.
SMA: Is there anything else?
KM: I did 152 presentations last year. We have something called Lunch for Life, which allows all of our clients to come to any one of the seminars anytime they’d like. We have a lot of clients come to lunch at these seminars and enjoy lunch on us again. We just keep an open-door policy.
SMA: Is that part of how you nurture your client relationships?
KM: Yes. In a lot of cases, when people come to us and they feel comfortable with us, in a very short time we’re pretty much helping them with their entire portfolio. So what happens after that is very important in follow up, because they’ll know if we don’t care and are disingenuous. So, we try to show them we care as much as we can.
SMA: Why are your presentations and seminars so successful?
KM: Well, the focus on the seminar is the total effort of what we do here. When I do a seminar, it’s probably 50 minutes. I tell them that their minds can absorb only what their rear ends can endure. So I keep it to 50 minutes. I think they appreciate that. We spend probably about half of that time or a third of that time talking about our infrastructure, what we do, what we’ve set up. We show that we put this thing together in a fashion that will serve them the way they want to be served. We have about four topics in this seminar. One of them is health care. The second topic is legal issues. The third topic is financial issues, which is pretty heavy on discussion on IRAs, dealing with IRAs. They are very complex. We have discussions on the complexities of the marketplace, the options that are available to them that are so complex. Basically, we talk about the things that can go wrong. What you don’t know that you don’t know is what can hurt you. That’s been the theme of my seminars for the past four years. We go through it in the seminar and we follow up after that and give them the answers. We can’t give them all the answers at the seminar, but we can give them a lot of the questions.
SMA: You’ve been called an advocate for seniors. What are the things you do to become an advocate? Why do you think that’s important?
KM: One of the things that I think is important is caring. If you get involved in people’s lives, then you have to get involved in the issues that affect them. To me, I’m not very good at following and jumping in the fray of something someone else has built up and started. I started my own thing. That was the impetus behind the radio program. The radio program is not a financial advice program. We talk about things that affect seniors’ lives and health care. We have a lot of health care on there. Recently, we talked about grandparents who are taking care of their grandchildren. Actually, 20 percent of the grandchildren in the United States are being raised by their grandparents. We had a whole program on that. We had the director of Family Farm on the program. We’ve never mentioned financial issues or had a discussion of what we do. There’s a reason for that. I don’t want people to think we’re always chasing after their money. I’d rather take an approach that it is more fun than that. It’s more fun to work with people where they are and you get paid the same. It’s not necessary to chase money. I’m passionate about that.
SMA: So the radio show is a time to inform seniors on other issues that are important to their lives, to their retirements, to their families, to them. Is that what you’re hoping to accomplish: information?
KM: Sure. We find resources for them.
SMA: You’re on the board of Family Farm. Can you tell me what that is and why you feel it is important to be involved with things like that?
KM: Family Farm is a program that was started by a close friend of mine. He got me excited about it because it is focused on changing people rather than solving the kid’s problem – it’s actually the parents’ problem. This is for children who are difficult children in a home and single parents having a difficult time with the children. But the program is called Empowered Parents. We help the parents by sending the kid to a camp. He finds out what it is like to live out in the wilderness for a while and not get his food fixed for him and getting bit by 200 mosquitoes. So they come back with a different attitude, but we also have to change the parents. We have to teach the parents how to handle their children. That’s the focus of Family Farm.
SMA: Is there something new advisors miss when they enter the senior market?
KM: I think the biggest problem, from what I’ve seen from new advisors, is their youth. New advisors coming into the industry need a mentor. They need someone to help bring them along and help keep them focused on working with people properly and not focused on the money. It’s difficult to relate to someone who is retired if you’re only 34 years old. It’s also difficult if you are retired to relate to them. So I think it’s a good idea for young guys to hook up with some older, more seasoned people who have been around awhile so they can actually take the ball and run with it.