Rodgers & Associates History

1984 - 1990: Rick Rodgers Envisions Better Financial Plans

Rick Rodgers has always wanted to be a financial planner. He began his career as a financial advisor in 1984 when he joined Shearson American Express. He chose Shearson because he heard they had begun a formal training program and were offering a “Personal Review Outline” (PRO) to clients at no charge. The outline consisted of a four-page questionnaire that a financial advisor completed and sent to the home office.

While the program American Express offered was not a financial plan, Rick was initially comfortable with it because it wasn’t another covert attempt by Wall Street to sell the product of the month. He found as he worked with American Express’s PRO program that with some modifications, the program worked much better. The report that the program produced only told a client if they had too high a percentage in stocks or bonds but it made no specific investment recommendations. Rick decided to add a recommendations page to the end, a cash flow projection, rate-of-return assumptions and so forth to give clients a better picture of their investment portfolios.

1990 - 1996: Rick Develops an Advanced Modeling Program

Like most Wall Street firms, Shearson wanted to control what their advisors were showing to clients for legal and compliance reasons. Rick knew his clients needed more information but Shearson was unwilling to take the next step. At that time, Prudential Securities was working on their own more advanced version of a similar program so Rick left Shearson and joined Prudential Securities in 1990.

Prudential’s program was an improvement because it offered sophisticated cash flow projections but the process was still very similar to Shearson’s: Fill out a questionnaire, submit it to the home office and let them produced a report. Rick noticed that almost all of his client’s reports were coming back with the same basic asset mix recommendations and the same rate-of-return assumptions. Since each client’s situation is unique, Rick knew that no single plan could possibly be right for everyone. Something needed to be changed.

Over the next several years Rick personally invested in an advanced modeling program that looked at returns for each asset class over the past 25 years. By understanding what the return would be for an asset mix over that time period, he could input his client’s current allocation and determine what their personal portfolio would have returned over time. Once he knew this, he could then run cash flow projections to determine if the client was likely to achieve their goals, or if their portfolio mix needed to be adjusted.

Rick was also convinced that the recommended portfolio should be structured to take no more risk than the client needed to achieve their goals. This was the beginning of the Rodgers & Associates WealthGuard™ principles.

1996 - 1999: Rodgers & Associates Forms to Offer Custom Financial Plans and Reports

By 1996 Rick was creating financial plans that had rate-of-return assumptions and were unique to each client as well as a customized asset allocation that was in line with those assumptions. He was still lacking a way of tracking performance to make sure his clients were moving forward as projected. Based on his research and his concern for accuracy, Rick began reporting performance numbers for all his clients on an annual basis.

Objections arose from the compliance people in the back offices of Prudential Securities. These were the same type of people Rick fought with at American Express. It proved to be a constant battle at every annual audit, and Prudential’s lawyers insisted on disclaimer after disclaimer. Because they couldn’t provide individual control over each report, they did not like his custom financial plans and they hated his performance reports. In 1996 Prudential forbade Rick from issuing his own reports.

That was the last straw. That November Rick formed Rodgers & Associates as an independent financial planning firm. The company still faced compliance issues, but this time it was different. Rick had found a broker/dealer that supported financial independence. They allowed him to add tax analysis, planning and projections to his plans, something that no Wall Street firm would permit, and that set the stage for Rodgers & Associates to specialize.

Rick’s goal was to provide a vastly superior experience for his client. To do that, he knew he needed to be an expert. He made a decision to work only with individuals who were retired or about to retire so that he could focus on their needs. He also felt a need for more advanced financial planning training and six months later earned the Certified Financial Planner™ (pdf) designation which is generally accepted as the gold standard in the industry.

Since than Rick has also earned the Chartered Retirement Planning Counselor® designation and the Certified Retirement Counselor® designations to emphasize his specialty. Each course and designation has added to Rick’s knowledge base and has helped in building a solid foundation for a customized financial plan.

With Rodgers & Associates in operation, Rick turned his attention to performance and developed a method for evaluating securities based on their performance against their peers. He observed that forward projections were rarely accurate. Instead, he found that past performance would show how a manager performed on a level playing field. The market over the past 12-month or 3-year period was just as good or just as bad for everyone within an asset category. The managers in the top quintile demonstrated their ability to outperform their peers. He reasoned that it is most likely they would be able to repeat that performance. If and when they began to under-perform, he would recommend changing them.

He also believed that looking at the positions annually allowed too much time to pass. Returns between accounts with similar allocations were inconsistent when evaluating performance annually so he started a process that evaluated some client accounts monthly, some bimonthly and others quarterly. His research indicated that reviewing performance more often than quarterly did not improve returns while less often than quarterly negatively impacted performance. He made it a policy to review all clients on a rotating quarterly basis.

1999 - Present: Rodgers & Associates Goes Fee-Only and Grows

By 1999 Rick noticed that his performance was still not as consistent as it should be. The problem was that Rodgers & Associates was commission based. Any time he needed to change one of his client’s investment positions, he had to take into consideration the cost to move. A mutual fund could cost as much as 5% to move from one fund to another. He would hold off making the change in hopes the position would improve. If it didn’t, he would end up making the change after the fund had underperformed for longer than he wanted. This was impacting performance, so Rick decided to work towards eliminating commissions and moving towards a fee-only business model.

In a fee-only environment, Rick could move positions quickly without any commission expense and at most with just a minor transaction fee. The decision was made to convert all existing clients to a fee basis and accept new clients exclusively on a fee-only basis.

In the fee-only world, Rick could invest clients’ assets in both load and no-load funds without any load and with little or no cost. He also worked at improving the firm’s selection criteria. To be on his buy list, a fund had to perform in the top 20% of its peer group over the last 3 years and still be in the top 20% over the past 12 months. Internal expenses had to be below the industry average for the fund category and there could be no manager changes in the past 3 years. To remain in the client’s portfolio it had to continue to meet the buy criteria unless there was a reason to keep it, like a large capital gain issue.

This philosophy was put to test over the next three years as the stock market entered the worst bear market in 30 years. By the end of the first quarter of 2000, Rick observed that all the mutual funds in his client’s portfolios that were over-weighted in technology were significantly underperforming his standards. He sold almost half of those positions in all the accounts. By the end of the second quarter the remaining positions were underperforming by an even larger percentage and were sold. His strategy of constructing a plan to achieve his clients goals with as little risk as needed helped the firm survive the three years at the turn of the century.

Having survived the bear market, Rick turned his attention to growing the business. Rick was managing nearly $80 million and was the firm’s only financial planner. He had hired great support staff but if something happened to him, there was no one to meet with clients and that was a problem. He also wanted clients to have a consistent experience at the firm, so he set about formalizing the principles of WealthGuard™:

1. Every client would begin their relationship with the firm by having a written financial plan at no charge.
2. The recommended allocation would be designed to reach the client’s goals with the least amount of risk.
3. All clients would receive a written review on a quarterly basis to maximize investment performance.

In 2004, Lita “Lee” Celia (now Pelko) CFP® joined the firm as a second financial adviser. She spent six months in training to learn the firm’s process and philosophy and then began taking responsibility for nearly half the client relationships. By the end of 2005, Rodgers & Associates had transitioned the last of the clients to fee-only and dropped their broker/dealer affiliation.

The two advisers were now managing almost $200 million so in early 2006 Rodgers & Associates hired Alan Campbell, a graduate of the Masters Degree curriculum in Personal Financial Planning at Texas Tech University, and the firm became the first corporate member of The National Association of Personal Financial Advisers (NAPFA). Our fourth Financial Adviser, Mike Helveston, CFP® was hired in early 2007.

Rodgers & Associates currently manages nearly $300 million for some 390 families and continues to evolve with a goal to find new ways to help our clients to be comfortable with and to better understand their financial situation. Rick Rodgers and Rodgers & Associates have been honored with several awards (pdf) over the last several years and are proud to present recommendations in an independent and unbiased environment.