Protecting Your Wealth

By Olivia Rahim | February 27, 2017

Recently, we had the opportunity to sit down with Lou Cannataro; CHFC, REBC, AEP, CASL, CLU, CLTC, MBA, Partner/Wealth Advisor of Cannataro Park Avenue Financial, a division of Northwestern Mutual.  Cannataro spoke frank about what we all should be doing as we enter the work force and throughout our careers. My conversation with him was eye opening as he reminded me how quickly the years go by and how we shouldn’t work 30-40 years and not have anything to show for it or to protect us in our elder years. Cannataro Park Avenue Financial will assist you in the investing process from day one. Go ahead, give them a call!

OR: What is CPAF’s approach to creating lifetime financial security?

LC: The CPAF approach to create lifetime financial security is based on strategic planning.  Initially, one must always start with what we call the “planning horizon.”
Above the horizon is our client’s mission, values and goals (MVG’s). When we first begin working with a client and through the subsequent years, this is our major focus.

Most individuals and businesses will consider different tools or tactics, but they never take a step back and truly clarify their goals, while identifying the greatest potential opportunities and greatest obstacles. Once we help our clients identify and verbalize their mission, values and goals, then and only then, do we go below the planning horizon. This is where you analyze the different tools and tactics to accomplish the MVG’s. We feel this sequence is the most important aspect to successful planning. 

After we’ve truly formalized a written document of a client’s MVG’s, we then create an in-depth analysis, showing them where they are versus where they want to be (in all aspects of their planning). We go from one end of the spectrum to the other in what we call the “defensive and offensive planning spectrum.”

From there, we deliver a total custom turnkey financial plan, replete with analysis and customized recommendations. The overall planning covers major areas such as: asset protection, money management, tax minimization and estate planning, while considering all of the personal nuances in each client’s particular situation. 

Also, we work with our client’s existing professionals (attorneys, accountants, mortgage brokers, etc.), but also assist in building out that team (through our referrals if needed) to perform the actual execution by the different professionals across their planning spectrum.  

Lastly, we will coordinate all the aspects of their planning.  We maintain an up-to-date file of important documents and priorities in the event of emergency or urgency and we take pains to assure all investment “buckets” and legal contracts support and supplement each other. This is an important point for when clients are referred to us, they may have managed some of the “pieces” of their planning, but never coordinated all the different tools and tactics to work in conjunction with each other.  

In defensive planning, we make sure if any of the “unexpected” occurs, our clients are readily prepared or at least have considered the consequences. This entails reviewing all the legal work (wills/trust, business agreements, etc.) and insurances (life, disability, long-term care, health, liability, etc.).  

Moving onto offensive planning, our clients’ goals usually include (but certainly not limited to): mapping out short term investments priorities such as real-estate purchases, business ventures and debt reduction, while reviewing long term asset allocation, education/retirement planning and tax efficiency.

Moreover, once all of the planning is up and running, we have at a minimum semiannual meetings with our clients to make sure everything stays in tune with what is going on in their lives. That is the most important aspect of planning. Getting an individual or business to initially take a deep dive, spend time on themselves and initiate the needed actions is a tremendous first step. However, getting them to resurface from their busy lives at least twice a year for an entire lifetime is what financial planning is truly about.

OR: What has been the testament to your success at CPAF?

LC: I think one of the most important reasons for our success at CPAF is the fact that our clients realize we actually do care. I always tell our team that people first want to “know that you care” then “they will care what you know.” Not only do we care, but we are very good at what we do. Our 25 years plus real-life experience, on top of all the credentials we continue to earn over the years, does allow us to jump into the “shoes” of our clients at any particular juncture of a client’s life and provide great insight and knowledge. 

We continually hear compliments about our team that echo “unbelievably attentive, always prompt and caring, all delivered on a consistent basis.” As simplistic as it may seem, most professionals and organizations struggle with delivering quality service and advice on a consistent basis. Our client’s connection to not only their advisor, but our staff is quite impressive.

 

The real testament to our success is the thanks we receive from our clients over the years. A client may stop for a brief moment in a review or on a quick call and simply say thank you. They may be thanking you for keeping them focused, helping them start the business, buy their home, not chasing their tail in a volatile market or protecting their hard-earned money from unnecessary taxation. Maybe it is a quick thank you when a longtime client realizes their day-to-day confidence came from having always had a well thought out plan. They may say thank you for being there when they lost their job, became sick or hurt or assisting them through a divorce (even better some have thanked us for keeping them together!). Sadly, even when clients have lost a loved one, they thanked us for making sure they were prepared, as best as possible, for the worse moments in their lives. 

When a client stops to say thank you, these brief moments that are woven into 25 years’ worth of conversations are our testament to our success. These “thank you’s” immediately bring to light what we as trusted advisors truly do for a living. We are provided the opportunity and responsibility to make a significant difference in people’s lives and we have delivered.   

OR: Wealth Management can be very complex and overwhelming for everyday consumers that necessarily don’t understand financial and investment jargon, retirement and estate planning, to accounting and tax services. How does your firm make prospective clients feel comfortable and more importantly, showcase transparency as you take on the role as their fiduciary?

LC: I do believe the reason that people enjoy working with us and our historically high client retention rate is the fact that we are known to dispel all the “smoke and mirrors” (my clients know I prefer to use a very technical term when discussing this: BS!) in our world of financial planning, especially on the investment side. 

I believe people in our industry try to make it complex on purpose using jargon, spending so much time trying to impress the client and feign sophistication. They are looking to provide some reason to remind the client that they “need them” and their expertise. This is even more evident when discussing investments. Advisors will spend an innate amount of time discussing the market, forecasts and what they believe will occur next. Then in reality, if they are taking on fiduciary responsibility, running the portfolio in a well-diversified manner, not timing the market but timing your investment to your goals, none of this information should be used to change your appropriate allocation.

Why? If an advisor is taking on fiduciary responsibility putting the clients’ best interests first, they know (and history demonstrates) timing the market does not work consistently. So, why is all this time spent with “smoke and mirrors?” Advisors along with clients are responsible. The advisor understands human nature and the two factors that propel many investing decisions: fear and greed.  It takes a while for an individual to “catch on” and not “buy in” on these conversations.  Eventually, the individual realizes that most of the conversation about the future market is truly unimportant.

Our clients need us to financially guide them through life to expose the pitfalls and opportunities, while being a strong support system. Our approach may not be sexy, but it is effective. We do not lure clients in—we utilize the opposite approach.  Many of our clients have heard us say, “Let’s lift the hood and see what is actually going on.” We dismantle the complexity rather than add to it. We take complex planning techniques and make them quite understandable. Why? Well first off, that was the only way I was going to understand them! Secondly, one should not get involved in anything unless they first understand what they are getting themselves into. Knowledge and understanding leads to action and outcome. Getting our client to develop a plan is one thing, getting them to follow through and implement on a consistent basis, is another.

Just as important, CPAF fees are efficient and transparent. Before it ever became popular or better put, before individuals started paying attention to costs, CPAF has been charging below average fees for financial planning and asset management. Over the recent years, existing clients at times have inquired about their fees. The questions stemmed from the new level of concern in the media. When we gladly lifted the hood, they were pleasantly reminded we had been significantly lower than the industry averages from the beginning. I also remind them our fee is not just about “running your investments,” but all of the planning/guidance we provide over the years. Those looking at their fees must not only pay attention to the level of the fees, but also what they are receiving for those fees. If it is mainly asset management coupled with insincere financial planning, this is where a client has to weigh the value. There have been studies that illustrate a good advisor can add 3% alpha to an overall portfolio. 

However, that is not because they have a crystal ball about future events.  It is because they know what a client truly needs to focus on, keeps them accountable and protects what has already been accomplished. 

 

All of our prospective clients come from referrals. There is a comfort level before they come through our doors and it is created by our existing clients.  When a prospective client comes in, usually the first thing they express are the feel-good experiences our existing client has outlined. The initial comments usually begin with how they said that they truly enjoy working with us and feel quite comfortable and secure in knowing that we are looking out for their best interests. They also verbalize the fact that everything is explained in an understandable manner and hail our proprietary planning software that lays out all of their planning and diagrams the coordination.  This is what I feel people are looking for—a relationship they can trust; planning they can understand, and a process to monitor their progress.

OR: As one of the top wealth management operations within Northwestern Mutual, your unique value proposition touches upon: “Objectivity, Customization and Efficiency.” Could you expand upon these core values? Why are they important to your business?

LC: These three points guide our firms’ goal of working in the best interests of our clients.

Objectivity: No matter what we are reviewing in the clients planning, we get into the clients’ shoes and look at it objectively in terms of what are their goals and which tools and tactics should be considered to accomplish these goals. We do not care which tool/tactic is implemented other than the fact that it is the best option available and that the client has participated in the analysis, understands and agrees.

Customization: Planning has to be tailored to be effective, otherwise it is destined to fail. Many clients may have similar goals (education, retirement, asset management, etc.), but the resources, priorities and how they want to accomplish these goals are quite different.  There are no cookie cutter answers to life, nor the planning that guides us through it. 

Efficiency: We look to be cost efficient in the fees we charge our clients before this tactic even became popular, but also within the tools we utilize to assist in accomplishing client goals. Our experience has shown that a particular tool/tactic may be the correct answer, but then we have to dig deeper and find the correct balance between efficiency and effectiveness therein.  We eliminate the “cheap,” “expensive” and “too good to be true” scenarios.

OR: CANNATARO PARK AVENUE FINANCIAL is a family owned and operated business. Your wife Colette was onboard from the very beginning since the company’s inception and your son Louis has also played an active role. What does it mean for you to work with your loved ones?

LC: At CPAF, all of our team members are “family” along with our clients. CPAF operates within a family atmosphere and that is not by accident. The partners in this firm know that we are viewed as trusted extended family members for our clients and how we interact with our clients on that level has to be mirrored in how we interact with each other within our operation.

This consistent focus on always looking to do what is in the best interest of the client as if they were part of our family is extremely important. Now we actually do have true family members working within our firm, which is fantastic. This mirrors our success in being a multigenerational firm along with providing multigenerational planning for our clients.

On a purely personal basis, I find it sad when your children one by one grow up and leave the home. They get so involved in their own lives and careers that the time you actually get to see them dwindles drastically.  BUT when they are working with you, one actually gets to see them grow and mature every day! Now I am sure that my family members may be tired of seeing me every day, but hey, “the doors open… but the ride…it ain’t free.” 

Many of you probably are aware of a report that was done years ago talking to the most successful CEO’s in this country. They were asked, “What was the one thing that they regret in life ?”  The one answer that was given repeatedly, was that they wished they spent more time with their family. Here at CPAF, we get to work hard and see our family (team members, clients and blood relatives) every day!

As for Colette, well without my wife’s support in the early years, this firm would have never gotten off the ground. In the beginning, she not only rolled up her sleeves to help propel this business, Colette was also busy raising our 5 children. She continues to work within the firm now and I cannot express the amount of gratitude and respect for all of her patience and dedication over the years.

OR: What is your strategy in creating/protecting wealth for your clients?

LC: There are multiple “best practice” tactics to consider in terms of protecting and growing one’s wealth.  

 

First and foremost, creating wealth is quite simple: there are no short cuts.  One of our most important goals is assisting clients in avoiding those “big mistakes.”  They come in all shapes and sizes and they can occur anywhere along the defensive and offensive spectrum.

As we avoid the big mistakes, we initiate the small steps that lead to creating and protecting wealth.  You create wealth by looking at how much income comes into the household versus how much goes out for “normal” bills. That precious difference is the capital you have to work with in your financial world. How much of that difference are we going to spend NOW to enjoy—for life is not a dress rehearsal—and how much are we going to put away so we can enjoy LATER ON as well. It does not matter if I am working with someone making $100k or $2M a year, the conversation is the same. 

You have to develop a plan and a system. Then step up to the plate, get that bat off of your shoulders and swing! Moving forward, you have to continue to review that plan because as your income increases, you should increase what you are allocating to the different buckets.  

You should look to avoid all distractions: the media, your neighbors, your friends, your cab driver, can pose enormous distractions in terms of making you question what you are doing. If you have a solid plan, have someone to review that plan with you and remind you how you are accomplishing your goals.  This will increase your probability of success. I can often be heard stating that the “enemy of good is best.” Many continually look for the “best” way to accomplish/implement/invest/buy, but in the end, the “good” way of accomplishing this would have worked out better and sooner.

Protecting what you have created is just as important. Quite often, insurance planning, especially long-term disability and long-term care insurance is neglected. Many will pursue life insurance since many accept the fact they can get hit by a bus or end up fighting cancer. However, getting sick or hurt is usually not on most people’s radar. The probability of getting sick or hurt is quite higher than dying early. Comprehensive insurance planning is one of the first aspects in protecting wealth and your ability to create wealth.  

OR: No matter where you are in life, retirement is essential for long term planning, stability and security. What kind of advice would you provide to someone who is hesitant to invest in this?

 

LC: Retirement is essential. However, that word is old fashioned, especially if you are speaking with young people. If you start the conversation about “retirement,” the next thing they hear is wha wha…wha wha wha… This is an old Peanuts reference; if you are young, you do not understand the reference the same way—you do not grasp the importance of saving now for something that is “so” far away. I often hear… “I promise, I will start a little later.”

The problem is, like your rearview mirror, later is always closer than it appears!  Once someone gets into their 30s, especially if they are in a demanding career and/or start a family, they blink and 15 years go by. Time, for some reason, moves depressingly quickly and all those things you would do “later” are passing you by.

At CPAF, we rather focus on financial security and having control. Those that are hesitant to invest in the future are most likely destined to not enjoy their future years. I understand we can be dead tomorrow, but most of us will still be around for quite a while. We strive to assist clients finding that balance of enjoying life now and in the future.  

OR: When is the best time to invest, contribute to a retirement plan and prepare for the future?  When is the best time to start cash value life insurance, 529 plan or execute your will/trust planning?  When is the best time to pay attention to your health, eat right and exercise…. you know the answer to all already…. NOW!

Human nature keeps CPAF in business. Procrastination, especially when we were younger, holds us back from accomplishing many things in life, particularly creating future wealth. When I install retirement plans for companies, I meet with the employees. As I address the very young workers, I tell them I understand I am cutting into their “drinking money!”  However, now is the time to start. You can afford it. What you cannot afford is not to begin.  The older employees in the room all nod their heads in agreement, for some have learned the hard way.  

Our biggest asset is time, and in life and wealth accumulation, we need to take advantage of it. I would suggest to those that are hesitant to invest in the future, to inquire with the older people in their lives Ask them when do they think they should start to plan for the future. The overwhelming response will be NOW!

OR: For those who just graduated college, what kind of advice would you offer for them to break into the industry?

 

LC: This can be an unbelievable career. Where else can you provide for your family by assisting other families get what they want out of life. It can be one of the most rewarding careers, and I do not mean just financially. When you step back and look at the deep relationships you have created with your clients and the body of work that supports those lives you have touched (quite often multiple generations), it is it is unbelievable and heartwarming. When a client, offhandedly in a review, thanks you for keeping them focused, helping them start the business, suggesting putting coverage in play or not chasing their tail when it comes to the market (whatever it may be) it is…priceless. 

But, and this is a big BUT, I believe the turnover ratio in this industry is over 90%. It is not easy. It takes an enormous amount of dedication not only to your business, but to your clients. If you are just coming out of college, I would suggest joining a successful wealth management team and work your way up to becoming an advisor versus jumping into the advisor role immediately.  Trying to become an advisor out of the gate is a much harder path for those newly entering the work force.

OR: Can you explain the philosophy behind “Live Life Differently?”

When a client feels he/she can pursue their dreams (career change, write a book, take a vacation, retire early, etc.) because of financial security – that’s when they “Live Life Differently.”

As I mentioned before, life is not a dress rehearsal.  We get to go through life only once. So make this performance not only your best but insist on being the producer, director and star of this show!

OR:  It was a pleasure speaking with you and learning about all the financial tools and capabilities that are available to us. 

LC: Thank you for your time and shining a spotlight on Cannataro Park Avenue Financial. www.cannataro.com

Cannataro Park Avenue Financial is a marketing name for Louis Cannataro, Aaron Bell, Bradley Bedell and Philip Coffman in their capacity as a representative of Northwestern Mutual and is not a legal business name. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life and disability insurance, annuities, and life insurance with long term care benefits) and its subsidiaries. Louis Cannataro, Bradley Bedell and Philip Coffman are Representatives of Northwestern Mutual Wealth Management Company® (NMWMC), Milwaukee, WI (fiduciary and fee-based financial planning services), a subsidiary of NM and federal savings bank. Louis Cannataro, Aaron Bell, Bradley Bedell and Philip Coffman are an Insurance Agents of NM and Northwestern Long Term Care Insurance Company, Milwaukee, WI, (long-term care insurance) a subsidiary of NM, and are Registered Representative of Northwestern Mutual Investment Services, LLC (NMIS) (securities), a subsidiary of NM, registered investment adviser, broker-dealer and member FINRA (finra.org) and SIPC (sipc.org).