A Conversation With ... Eric K. Peterson

Tell us about your company.
This is my 25th year in business. My practice is multifaceted, because everybody’s situation is different. Someone may need some help with estate planning. Someone may need some help with investment management, with asset allocation of their retirement plan at work. People may need assistance with developing tax strategies, or (they) may be interested in a comprehensive financial plan that outlines a number of different issues that they might have. I normally run with three full-time people who support the work that I do interacting with clients. I’m currently interested in bringing on another adviser to the firm. My practice has expanded to the point where I want to have somebody come in and be able to develop their own clientele and assist with some of my clientele. I’ll probably be looking for someone who has 10 to 15 years in the business and is a Certified Financial Planner.

Do opportunities exist in today’s market?
There are numerous opportunities out there these days. … If your objective is to amass as many shares of something as you can, do you want to buy when the price is high or when the price is low? Low – and there’s an example of an opportunity. Some people are … taking a look at some indices or averages of market performance. For example, the Standard & Poor’s 500 stock index has basically had no gain on average over the last 10 years. … That does not mean that there have not been gains in the market, because there are numerous investments and numerous balanced portfolios with the right allocation of stocks, bonds, growth and income investments that have had a relatively good rate of return on average over the last 10 years. If you’re looking longer term, this could be considered an opportunity.  

When clients don’t get anticipated results, how do you handle backlash?
This question actually underscores an extremely important aspect of my practice and … the importance of education for clients. I am known for spending a lot of time with clients upfront, before they invest any money … in order to prepare them for the experience of investing in today’s market. When the markets did take a downturn, we tripled the number of client appointments that we had to proactively be in contact with clients. I’m very happy to say that I did not have a single angry phone call in this downturn, because of the fact that my clients, I feel, are very prepared. That’s not saying people weren’t worried – of course people were worried – but in the same standpoint, they’re more in tune (with the idea) that if the market is going down, it’s with their very long-term dollars, and they know that the market has a very good chance of turning around.

Has the current market made investors more averse to risk?
Absolutely, and I would say that it has made people have a more realistic perception of … numerous types of risk. There’s interest-rate risk, and we could be running into some problems in conservative assets, bonds, for example. There’s a growing conversation in professional circles that there may be a  correction in the bond market. Money market accounts and CD (interest rates) are very low right now and may not be keeping up with inflation.

What do you consider long-term?
I tell my clients that their retirement nest eggs should continue to be growing until they’re in their mid-70s, and that’s really hard, because when somebody has moved their pension plan or 401(k) et cetera … once a month, they’re getting a statement that shows a huge balance, and people feel 8 feet tall and bulletproof. And they don’t realize that those dollars need to keep on growing well into their 70s to dramatically increase the odds of having those dollars in their 70s and 80s. Some people say, “Well, I’m not going to live that long,” and it’s kind of like, “OK, tell me when you’re going to die, and we’ll tell you exactly how much you can spend today.”
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