Filbrandt Investment Advisors evolves into niche serving university faculty

July 10, 2017 GMT

When Patricia and Michael Filbrandt opened the doors of Filbrandt & Co. in 1981, financial investment planning was somewhat of a stepchild in their insurance business, a welcome bonus for the university faculty they serviced.

But the economy changed, and employers shifted their retirement plans from defined-benefit pensions to defined-contribution vehicles like IRAs. As options for the latter multiplied, retirement investment choices got a lot more confusing, Patricia Filbrandt said.

“What the university professors really valued more than anything (among our services) was the overall planning aspect that we offered to them,” she said. “We evolved into a financial planning firm.”

The company made that new emphasis official in the mid-1990s, rebranding as Filbrandt Investment Advisers.

The arrival of the internet changed the Filbrandts’ business plan even further, she said. When they started their business, they expected to have regional offices to serve universities across the country, but technology allowed the business to remain in Madison as it grew. The business model also evolved; instead of drawing income from sales commissions on insurance plans, the Filbrandts charge a fee for advice on how to choose among the funds and options university faculty were being offered to save for retirement.

“We went from a 100 percent commission-based to a 100 percent fee-based business,” she said. “We are able to save them a lot of angst.”

As staffing needs have grown, Filbrandt said finding qualified employees has been a challenge due to a lack of formal training programs for financial planners. She noted UW-Madison moved financial planning courses into the School of Business only a few years ago.

“Most people in the financial service industry evolve either from the securities industry or the insurance industry. You are just beginning to see people graduate from universities today who elect to become a financial planner without going either of those routes.”

That has led to a lot of training after the hire.

“Probably one of the most difficult things for us as a financial planning firm has been to find staff, and quite often when we find them, we have to retrofit them. We have to train them,” Filbrandt said. “So we’ve learned over the years — our biggest investment is our staff. It’s been that way since day one. When we talk about bringing in new business, we need to have the staff to absorb that.”

Q. Your clientele is university professionals. How would an educator access your services — and why? What are the criteria for needing your services?

A. We host informational webinars and seminars on campuses throughout the U.S. several times throughout the year. The university community finds these webinars and seminars, along with information available through our website, to be a valuable resource. Additionally we offer initial no-obligation in-person meetings that are typically one hour in length to individuals while we are on campuses.

We really don’t have a specific criteria for those needing our services, but usually individuals begin to realize the value of planning services when retirement becomes more “real.” How someone saves money during the last 10 to 15 working years, invests their portfolio, and takes their Social Security income can significantly impact their retirement years financially.

Do you compete with other financial services companies for a share of this market, or do you contract with various institutions to handle their staff’s assets? For example, could an individual adjunct professor walk in your front door for service?

We contract with individuals at universities, not the universities. We have been approached by universities with inquiries to provide broad services at specific campuses but have not done so yet. The type of planning services that we provide are broad and complement the information that individuals receive from their benefit departments and retirement account vendors. Our advisory service includes all benefits that are available to individuals, not just their retirement account assets.

What’s unique about your clientele? How should financial planning for educators in higher education be done differently?

Most of the campuses in the U.S. today offer a defined-contribution rather than a defined-benefit pension plan with more than one custodian. The brokerage industry is not able or equipped to advise on these assets as the assets must remain with the employer’s custodian while the individual is working.

For most people in academia, their retirement account is either not managed or very poorly managed at best. Our firm has electronic access to view our client accounts and can advise and report on the assets while they are at the respective custodians.

We have found that due to this inattention to the university employee’s retirement funds that their overall financial planning needs are neglected.

What are some of the biggest financial planning risks for university professionals?

There are several. Some that come to mind quickly are, first, not taking full advantage of all of the benefits offered by their employers. Then, not making the appropriate investment choices and rebalancing their portfolios when necessary, not minimizing their tax bill and not budgeting for needed health care costs, particularly assisted living costs, during retirement. And finally, not maximizing their Social Security benefits.

You have expanded your services to include the Filbrandt Private Trust. What does that mean?

Many of our clients have significant estates and subsequent estate planning needs, which may include trust services. They find that our family planning services save much time and money when there is an estate transfer. Being able to offer trust services when needed will add to the seamless transfer of an estate and ultimately save more time and money for our clients.

Are people in the U.S. — in Wisconsin, for that matter — more likely to have enough money to pay for their retirement years than they were 10 or 15 years ago? Is a greater proportion of the population outliving their resources?

Most of our clients are savers by nature and have the income levels that allow them to save adequately for retirement. We find that most people don’t know how or take the time to determine if they have adequate funds for their retirement. Many Americans do not have the pensions that our parents had during their retirement years. There is a great need for more financial literacy in our country, and this includes Wisconsin.

Should people in this country be nervous about political volatility and how it will affect their investments? What are you advising your clients about cash reserves, for example?

We certainly live in a world filled with all kinds of volatility. This volatility makes it more important than ever to invest in an appropriate asset allocation that reflects your risk tolerance, age, financial assets and years to retirement. One should keep a cash reserve as an emergency fund. If you receive a large infusion of cash, such as from an inheritance, at a time when the market is extremely volatile and you wish to invest the cash, we might suggest that you dollar-cost-average the funds into the market.