Ministering to the Middle Class
September 26, 2017 by Steve Garmhausen
In an industry obsessed with pursuing the wealthiest clients, Joe Jacques is perfectly happy with his mostly middle-class clientele.
“They’re down to earth, good savers, responsible people,” says Jacques, 63, whose typical client has a relatively modest $750,000 investment account. “They appreciate what you’re doing, and they actually say thank you.”
Jacques and his seven-person team seem popular with clients, too. Jacques Financial manages $695 million of assets for 3,522 total households around the country. These clients’ main need is to create a secure income for retirement, and Jacques uses a simple combination—annuities and dividend stocks—to deliver it.
Raised in the Pocono Mountains town of Stroudsburg, Pa., Jacques earned an accounting degree from what is now Bloomsburg University, along the Susquehanna River. His career started in what is now the Government Accountability Office. Jacques actually did some exciting work there: Still in his 20s, he assisted in the investigation of then-President Jimmy Carter’s brother Billy, who had been accused of improperly taking money from the Libyans.
“I’d be in Strom Thurmond’s office with Bob Dole and these power players, joking like normal people,” recalls Jacques, “and they’d turn to me and ask, ‘What information do you have for us?’ ”
But Jacques spent most of his time auditing government agencies, when he would have preferred to be doing taxes and working for himself. In 1983, he left Washington to do just that. Along the way, he started taking financial-planning courses and, with the help of an industry mentor, added life insurance and annuities to his bailiwick.
THESE DAYS, Jacques spends much of his time investing his clients’ money, and he’s bullish on domestic stocks. “I believe the U.S. market is still the strongest game in town,” he says. If tax cuts and an infrastructure push become realities, the Dow could hit 23,000 by the end of this year and 24,000 by the end of 2018, he says.
Materials, transportation, construction, and other sectors could help lead the rally, should the Trump administration notch wins in those areas, Jacques says. “I believe eventually they’ll get their act together,” he says. “My gut is no on health care, but yes on tax reform and infrastructure.”
Jacques uses active mutual funds for stock exposure. One of his favorites is the Oppenheimer Rising Dividends (ticker: OARDX), which has returned 11.6% so far this year.
The advisor favors a value- or growth-investing style, depending on the age of the client. Those in their 50s or older like the conservative approach of seeking underpriced stocks, while younger investors can tolerate the higher risk—and hopefully reap the rewards—of growth stocks.
Jacques relies heavily on fixed annuities to help his clients replace their income in retirement. Specifically, he favors fixed-index annuities, which can pay a minimum guaranteed rate of interest over a predetermined number of years, as well as additional principal growth.
One of his go-to annuity providers is Pacific Life. A fixed-index annuity with a lifetime income-benefit rider enlarges an original, base investment by 7% for each year payments are deferred. Clients then receive a percentage of that base each year as income for the balance of their lives.
Fixed annuities are often considered to be more appropriate for the retail market than for the more-affluent market. But even in his market segment, Jacques stands out for his devotion to the product over the years. “A lot of big advisors in their early histories all did annuities, and they loved them,” he says.
Many of those advisors dropped annuities after they started managing money on their own and found it more lucrative, according to Jacques. The advisor only recently started providing man- aged portfolios, using a third-party manager, for clients seeking more liquidity.
The third-party strategies incorporate bonds, but in his own investing, Jacques avoids them due to looming interest-rate risk. “Bonds will be more risky than stocks going forward,” he predicts.
JACQUES FINANCIAL prides itself on having built a successful financial-planning and investment-management practice while preserving its tax-preparation roots. Indeed, the firm prepares and files more than 2,000 individual returns each year. This work lets Jacques and company see everything from clients’ net worth to their savings rates to their 401(k) contributions. And that allows the team to provide well-rounded advice. Says Jacques: “You can’t hide anything from the accountant.”
