When Scott Macolino and Roger Shaffer teamed up at Merrill Lynch's North Atlanta office in 1994, their modus operandi for building business was “calling little old ladies” and selling them municipal bonds. “That's not a process,” said one older broker, to whom the duo turned for advice. “If you want to be a vendor, keep pitching bonds, but if you want to be treated with the same level of respect as lawyers and CPAs and doctors, you have to develop a process. Massage it, use it and make it work.”
That was a turning point. From then on, they saw themselves as asset gatherers and not just bond salesmen. The mentor suggested they use the firm's financial planning tools and put their faith in money managers. They took the advice to heart and focused on the advisory process. Now, eight years later, Macolino and Shaffer manage more than $1 billion in assets.
Their accomplishment is even more impressive when you consider that both were new brokers and new in town when they hooked up. Macolino, now 38, moved from New York and Shaffer, 32, was from Washington, D.C. “We didn't know a soul here,” says Macolino. However, they saw enormous potential for growth.
So they began their search for the newly affluent. “Atlanta has new money, which means the path of resistance is lower, the odds for success are greater,” says Shaffer. Using a city directory as a guide, they found wealthy neighborhoods in North Atlanta and nearby suburbs, and drove up and down the streets looking for big houses and fancy cars. “We decided to find the money river and camp by it,” Macolino says. “We didn't buy into ‘the millionaire next door’ idea. The clients we want have Jags and Mercedes.”
Their marketing was simple and direct. They identified 12 country clubs within those target neighborhoods and arranged to host Saturday breakfast seminars on financial planning at the clubs.
“Not Rocket Science”
The duo cast a wide net, calling up to 1,000 people for each session and sending written invitations to those who showed interest. To get phone numbers, they used a reverse directory to find individuals who lived in the wealthy communities they identified.
Usually, 15 to 35 people showed up at the breakfasts, which continued every month for six years. The expense — about $1,000 per seminar for food, rent, invitations and postage — was costly for the young brokers, but their perseverance paid off. “We got a lot of clients this way,” says Macolino. “Some of our best centers of influence in local corporations came to one of these early seminars.”
It's not rocket science, says Macolino — just hard work. The brokers often put in 14-hour days during the week and six hours on Saturdays. “What we did can be replicated,” he says.
The key is in attracting the right kind of clients, they say. In the beginning, they targeted investors with $100,000 or more in assets. By year two, they raised the minimum to $250,000. The next year it was $500,000, then a million. By year six, it was $2.5 million. It's now $5 million.
Their clients tend to be executives of blue chip companies, including Atlanta-based Coca-Cola. Most were transplants from other parts of the country. They had stock options, concentrated positions in their company's stock, 401(k) plans and savings. Many were too busy to learn about personal investing and may have never worked with an investment professional before.
Over the years, Shaffer and Macolino offered their clients comprehensive financial planning, not just investments. Soon, they added such services as credit management. “We help clients implement every idea in the plan over time,” says Shaffer. “We work with their attorneys and CPAs, and we also have our own network of attorneys.”
Finally, it's about more than money. “I like to think of the Swiss bank as a model,” says Macolino. It's not just the secrecy, but the service that attracts investors. “Those bankers know everything,” he continues. “They're the family's consultants.”
All in the Family
Increasingly, they work with multiple generations of a family. “We begin with Mom and Dad, then take it to the next level and get the kids involved,” Macolino says. “Estate planning and philanthropy are part of it, and these people want to pass on values as well as money to the next generation.”
Macolino and Shaffer, both married with children, also worry about the values they pass along to their kids. While they long ago could have moved into the neighborhoods they used to tour in their search for riches, they continue to live modestly. “We believe in deferred gratification,” says Shaffer, who graduated from the University of North Carolina at Chapel Hill. “That's the way we built our business and that's the way we live.”
After working at a small financial firm, Shaffer took graduate classes in business, finance and economics before landing a job at Merrill.
Macolino spent five years in the Navy after graduating from the U.S. Naval Academy. He subsequently earned an MBA from NYU, then got his CPA while at KPMG Peat Marwick. “I always wanted to get into this business, but I wanted to go into it with a unique dossier,” says Macolino.
A Team Effort
Now, with 150 accounts, the trick for Macolino and Shaffer is to maintain the same approach when they can no longer devote their personal attention to every client.
Both stress the value of a strong support team. Theirs includes three registered client associates. Rhonda Nash handles a wide range of responsibilities including statements, checks and transfers of assets. Rebecca Childress handles stock collars, prepaid forwards, exchange funds and other alternative investments. Colleen Kenefick, who has an MBA, deals with stock administration, cost basis data, performance monitoring and insurance. The team is trying to fill a fourth position.
“We have the same skills and values, so we can give seamless service when either of us is out of the office,” says Shaffer.
Their boss, Al Thornton, managing director of Merrill's North Atlanta region, says they are model broker/dealers. “They represent the professionalism that we want all our people to display,” he says.
Macolino and Shaffer now count on referrals for business growth. “The challenge is to provide the same level of service clients expect while continuing to grow the business. This means finding the best help there is,” says Macolino.