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January 2005
Right On The Money
By Susanne B. Deitzel

     In the heart of SouthPark’s marbled Rotunda Building, hammers are pounding and saws are busy carving new offices for Carroll Financial Associates. In December, the esteemed financial planning group made a $2 million purchase of the building, increased its office space by 40 percent, and added four new professionals along with their clients.

     Larry Carroll, president, senior planner and founder of Carroll Financial Associates (CFA), reflects on the rewards of 25 years of successful service. “There is a big difference between having 25 years’ experience, and having one year’s experience 25 times. There is a lot of gray hair around here, and our clients definitely benefit from that.”

     Carroll leads a team of planners who, combined, offer over a century of experience. With 1,400 clients and over $1 billion in managed assets, CFA is a formidable presence in the marketplace.

     Carroll’s success is founded on a demonstrated command of financial markets, a keenly analytical disposition, and an impressive presence tempered with a calm and reassuring demeanor. He served as the 1987-1988 chairman of the 24,000-member International Association for Financial Planning (IAFP, now the Financial Planners Association (FPA)). His expertise has been documented in national publications including Money, Newsweek, The New York Times, The Wall Street Journal, Business Week, U.S. News & World Report, and has appeared on the “NBC Nightly News” with Tom Brokaw.

     Carroll is also one of only eight advisors in the country to be named on all five of the “best financial planners” lists by both Worth Magazine and Money Magazine, and he is the only advisor in North Carolina to be named on all of the lists.


Building the Portfolio

     After getting his M.B.A. from the University of Tennessee and his C.P.A. license, Carroll worked as a public accountant – a position he quickly tired of. He started his own planning firm in 1980, with no clients and no experience, in what was then a relatively nascent industry. Says Carroll, “I knew that I wanted to go into a broader-based advisor role beyond that of a broker. Well, I starved for three years, but then added a few clients and began to develop the character of my practice.”

     While Carroll’s typical client today has a net worth between $1 and $5 million and liquid investment assets of $500,000 to $3 million, he had to kiss a few frogs to get here. “I quickly learned what makes a successful relationship between planner and client. The client must be able to share any and all information that is relevant to the financial situation, must be a good listener in terms of the advice he/she receives, and must have reasonable expectations. Most importantly, however, the client must be able to trust the planner. If I run into a person who is naturally distrustful, that is a deal-killer. You can’t build any relationship without trust.”

     For the planner’s part, Carroll highlights one quality above all others, “The client’s interest is the only interest that matters. A planner will not survive at this organization unless they consistently demonstrate that the client’s well-being is the highest priority.”

     He also has stringent requirements for hiring his planners: “A senior planner must have earned a C.F.P. (Certified Financial Planner) or similar designation, and have significant experience in the field.” He adds, “Our least experienced planner has 10 years of expertise.” Carroll also says that the value of an ethical, experienced and talented planner with a solid client roster is so high that he doesn’t hesitate to make room for them in his organization when he finds one.

     Carroll’s three other senior planners are highly accredited and have also had their opinions published in various national and industry publications. Kelly Graves followed a parallel path to Carroll before he joined CFA in 1984. Graves had an M.B.A. from the University of North Carolina, expertise in banking, consulting experience with Arthur Andersen, and a “desire to control his own destiny” as well.

     John Patterson and Carl Brooks, the firm’s other executive vice presidents, joined CFA in 1987 and 1990, respectively. Says Carroll, “These partners personify the heart of CFA: experience, intelligence, ethics, and commitment to excellence. By virtue of these characteristics as well as a diverse specialty base, we are able to ‘cross-pollinate’ and provide the most comprehensive and decisive advice available.”


Reflections, Expectations

     As one can imagine, Carroll has a lot to offer in terms of reviewing the current market.

“I don’t mind telling you that the last three years have been hard - like Chinese water torture. People get tired of hearing, ‘Be patient, the market will turn.’ But it was amazing; when the market finally did start moving up, the anxiety just seemed to evaporate.”

     For his part, Carroll is satisfied with CFA’s ‘reading of the tea leaves.’ “We outperformed the market and survived the second worst U.S. financial market in history. Not only that, but I believe that the relationships we sustained through this period will be the most satisfying and rewarding yet.”

     Carroll does anticipate the largest issue in the near future to be retirement planning for the baby boomer. He says, “I just don’t think the majority of them have their heads wrapped around it yet. In our grandparents’ days, people retired at 65 to sit on the back porch and reflect. These days, people will live 30 years after that retirement age, plus they are healthier and want to do things, rather than just sit around and wait.”

     “A lot of advisors estimate that an individual should plan on having 70 percent of his pre-retirement income for his retirement. I know a lot of my clients increase their expenses because they now have the time to enjoy things that they couldn’t while working,” Carroll explains.

     He also anticipates that due to the inevitable rise of interest rates, bond prices will decrease reducing the return on money market and certificates of deposit. Carroll says, “It is also likely that stocks will provide a slightly lower return, so the bottom line is that for the next 20 years or so, investments will have lower returns.”

     After a lightning-round of financial Q&A, the gist of Carroll’s comments is guardedly bullish. When asked about the current value of the American dollar he says, “Currency fluctuates in broad cycles. The current situation highlights the importance of investing in foreign markets through mutual funds. Since less than 50 percent of the world’s stock value is in the U.S., most Americans are significantly underinvested internationally.”

     On the future of Social Security Carroll observes, “If and when Social Security becomes privatized, the transition process is going to be significant. I suspect that when everything eventually washes through the system, investors will have a few conservative choices for their retirement accounts: maybe index funds, a balance fund, and a bond fund. This way it will help people avoid shooting themselves in the foot.”

     If anything, Carroll’s analysis appears to demonstrate the need for pending retirees to become educated concerning their financial future.

     Carroll is also optimistic about employment, while stipulating that successful employees will be mobile and trainable, and he also maintains that unskilled low-paying jobs will be outsourced on an increasingly rapid basis. “Where jobs can be outsourced to another country for cheaper wages, they will be lost. I think there is a hazard in trying to save jobs that are inevitably moving offshore. Our task is to focus growth on jobs that fit the country’s strengths.”

     He adds, “The loss of U.S. jobs is an understandably emotional subject. But a lot of people do not understand the implications of keeping these jobs domestically. If we kept all of the unskilled jobs in the U.S., the discount stores we have come to embrace would instantly have to increase prices by 20 per cent. That too would not bode well for these individuals.”


Character and Credibility

     While the degree of Carroll’s financial expertise is evident, he also demonstrates a management style that maximizes the firm’s talents for the greatest payoff.

     Explains Carroll, “Most independent financial planners are one or two-man offices. Typically, smaller offices help to transition do-it-yourselfers and/or employ a collaborative relationship where the client is hands-on in most decisions.”

     “By the end of our office reconstruction, we will have thirty solid planners,” he continues, “and our focus is to help those clients who would rather delegate their financial decisions to a trusted advisor and enjoy the fruits of our labor.”

     Carroll also emphasizes the mutual benefits of a fee-based model as opposed to commission-based services. “I think that the switch from commission-based to fee-based is one of the most significant trends in the industry. While there are a lot of good commission-based advisors out there, I have found that the fee-based model clears the decks up front. This way the client has complete confidence that the decisions the planner is making are objective.”

     “Too,” he adds, “the fee-based model also allows the focus of attention to be on current clients rather than prospects. With commissions, the prospect is more valuable than the client, because the transaction has occurred and you need to look for other customers. However, charging a fee makes the client you already have a constant incentive for successful investment.”


Framing the Future

     As for his personal and professional investment in Charlotte, Carroll says he is ecstatic about the city’s growth and commitment. “I grew up in Rock Hill and saw this area before SouthPark was even underway. When I graduated I had to decide between moving to Charlotte or Memphis. Needless to say, I am sure glad I chose Charlotte.”

     He says that he is also optimistic for Charlotte’s growth in the near future. “Charlotte has demonstrated that it understands that job growth equals all around growth. As long as we continue to attract new corporations and small businesses, Charlotte will have a very fertile ground for continued growth.”

     “The banking community also under girds the regional economy very well. The two big banks have solid foundations and great lending cultures, and while they are around they seed opportunities for smaller banks. Also, there is an enormous amount of business generated by these banks, from lawyers to printers, courier services to technology – the list goes on and on. They are a true financial engine for the city.”

     Carroll counts on the big banks to be around for quite a while, “It would take a big change in culture for one of the big banks to leave Charlotte; it is hard for me to draw a scenario where that would happen.”

     It is also difficult to draw a scenario where Carroll and his team of experts wouldn’t be right on the money for the next twenty-five years of the financial horizon.

 Disclaimer: The financial observations herein are not intended as investment or planning advice.

Susanne Deitzel is a Charlotte-based freelance writer.
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