Mark L. Jaffe, CFP® has spent the last 25 years of his professional life working with clients to help meet and exceed their personal and professional financial goals. From Business Asset Management to Personal Financial Planning and Retirement Planning and Investment Advisory, Mark’s style is straightforward, calm and collected. He focuses on calculated planning and decision making noting that reactionary financial planning can be your worst enemy. Mark stays focused on his job, helping you make the best decisions in the heat of the moment. This is an interview I conducted with him to learn more about his style, experience and expertise.
Mark, thanks for doing this interview with us today.
Mark, can you start with sharing a little bit of your own philosophy behind wise investing and planning?
In the past 25 years I have seen the markets move through numerous cycles. Each time the market moves up rapidly, we hear self-appointed pundits claim a fundamental paradigm shift in how the markets work. When the markets move down rapidly, we hear another set of these pundits claim this is the new reality. Setting a goal for yourself and your plans and dreams and then making and following a plan to give yourself the best opportunity to achieve your goals is what has worked for my clients, big and small, over the years. Not investing with the flavor of the day, month or year.
You mentioned one of your favorite quotes is by Rudyard Kipling. Will you please share it with us and then tell us what it means to you?
It is the first stanza of Rudyard Kipling’s poem, “If-“, which goes, “If you can keep your head when all about you are losing theirs and blaming it on you, If you can trust yourself when all men doubt you, But make allowance for their doubting too;”
To me that means if you can keep from overreacting to the craziness that makes up the Financial and World news while everyone else is melting down you are going to be way ahead of the game. Making decisions out of fear or uncertainty almost never goes well. I read and research the market on a daily basis but much of what we hear about are short term glitches and quite often the herd mentality takes over and people start to make rash decisions that are not in their best interest for the long term. Often times I help my clients best by talking them through their immediate fear and helping them analyze the good and the bad of the news they are processing.
A good example would be the recent “Fiscal Cliff” which was an artificial deadline set up by our elected leaders to force the White House and the Congress to interact with each other. Much political drama was made of it. Some pundits predicted a meltdown of the United States and the financial sector if we went over this “cliff”. A number of my clients called with concern that this was going to adversely affect the Markets for the long term. It did not but it sure did a lot for getting people to pay attention to TV news and Newspaper headlines for a while.
Mark, can you give a detailed overview of the services you are providing here in Ashland?
I am a Certified Financial Planner and I provide Fee-Only Financial Planning and Investment Advisory for Businesses and Individuals. I help Businesses set up and improve their Qualified Retirement Plans (401(k), Profit Sharing, Defined Benefit, Defined Contribution Plans) and help Individuals manage their investment portfolios. I also work with clients who just want a snapshot of where they are financially and where they would like to be in 3, 5, or10 years and how they might plan to get there.
Will you talk a little about your own investment philosophy and how it has been shaped?
My own investment philosophy has been influenced heavily by the Fama-French Three Factor Model. I believe that in today’s world of instant information overload the markets, as a whole, are fairly efficient. By allocating one’s portfolio broadly over an assortment of specific asset classes subject to one’s risk tolerance and rebalancing on a regular basis one can benefit from the performance of the different asset classes over time. I skew the balance of my clients’ stock investments a bit more towards the smaller cap, value stocks than the average of the markets in general as historically they have given a slightly better return for the risk taken over time.
How do you start the investment process with your clients?
When I first meet with a client we determine the client’s risk tolerance. Because I work with investments on a daily basis, I may have a higher risk tolerance than a specific client. We want to invest the client’s money based on their risk tolerance so that with the predicted range of volatility in a given portfolio, that client will still be able to sleep at night while giving themselves the best opportunity to achieve their goals. This is an ongoing process as I like my clients to understand what they are investing in and how it interacts with the markets in general. As they become more familiar with their investments they might choose to be a little more aggressive or a little more conservative and we adjust for that over time.
Let’s talk about good times versus bad times.
When times are good, people in general are happy with their investments and planning. When times get tough, many people panic and tend to make financial decisions that are exactly the opposite of the adage, “Buy low and sell high.” One of the most important things I bring to the table is an objective view of the situation for my client. We will discuss the issues they are worried about and go over both the positive and the negative. Together we will come up with a solution that will work for them.
What part of asset management do you participate in and can you talk about your fee structure?
Most of my clients use me for my investment advisory services. We set up accounts with a custodian (either Schwab Institutional or TD Ameritrade Institutional). After determining risk tolerance, financial plans and goals, family situations, etc. I come up with a proposed model of investments. We discuss this and fine tune it to make it work best for them. I mainly use a number of institutional index funds that carry extremely low internal costs and cover very specific portions of the markets including Stocks both Domestic and Global, some Emerging Markets and Bonds and Cash/Money Markets. My clients receive monthly performance reports from Jaffe Financial Services that can be customized to their needs. They also receive either paper or electronic reports from Schwab or TD Ameritrade that confirms the totals in their accounts.
As a Fee-Only Planner I am not compensated in any way by commission on trades. My clients pay me a monthly fee for assets under management. It averages to just over 1/10th of 1% a month. If their account balances go up, they are happy and I get paid a little more. If their account balances go down, I get paid a little less. We both want to see their accounts do well.
Will you share a little bit about your financial planning process?
Some clients come to me just for a financial plan. We go in depth as to what they are looking to achieve, where they are and where they would like to be in a given period of time. I research the investments they currently have or have available to them, in a company retirement plan for example, and recommend what they might invest in and how much they might need to invest on a regular basis in order to achieve their goals. I charge a flat fee of $1,500 for a written Financial Plan. If they choose later to use my Investment Advisory services, they are credited for what they paid for the plan against any asset management fees within 12 months of the plan delivery.
Over the past 25 years of working with your clients what do you see as some of the greatest value you are able to deliver to them?
I have seen many of my clients go from getting their first real job to getting married. From getting married to having kids. From having kids to planning for the kids college education. From the kids college education to becoming grandparents and getting serious about retirement. I have clients in all stages of this process and it is always fascinating to me to go back to my initial meeting notes to see where they wanted to be at some point in the future and to what they have achieved. The greatest value I bring to them is intelligent advice and an objective view on their individual situation.
Please tell us a little bit about your family and relocation to the Rogue Valley.
My wife Julie and I grew up in Southern California. We both graduated from UCLA and thought we would live our whole lives in California. We both had a dream of living a more rural lifestyle and had visited Southern Oregon and specifically Ashland many times over the past 20 years to visit family and friends. We decided it was time to act on our dream and here we are in Ashland. We have two sons, Eli 16 and Ben 13 and we are loving it here!
Finally, any last words of advice or comments to our readers?
Buy low, sell high, dream Big, plan wisely and by all means, take Rudyard Kipling’s advice and “keep your head.”
Jaffe Financial Services LLC.
2305C Ashland Street #426
Ashland, OR 97520