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Portfolio > Investment VIPs

Singles and Special-Needs Clients

By Elizabeth D. Festa

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Micki Pitch runs a two-generation practice in Cedar Knolls, New Jersey, with her eldest son, Joe. They specialize in serving the investment and retirement needs of single women and, more recently, those with family members who have special needs.

Her first year in business, a quarter century ago, she earned $6,000. Pitch Financial Services now has $50 million of assets under management, and Micki’s original clients are still with her, as are many of their extended family members. “We go to their weddings, their bar mitzvahs, their christenings. It is almost like a big family tree,” Pitch says.

An important constituency among the clients is women in the workforce. Pitch now helps other women become financially independent, pointing to the needs of single women who are doing well in their careers. “I help single women manage their money so they are a little more growth-oriented in their investments rather than just in very safe investments” she says. “Generally, they don’t know what to do so they keep everything in the fixed portion of their 401(k), the stable account.”

She laments this loss of investment returns for retirement planning. One such woman who had played it too safe in a 403(b) plan, a teacher, “came to us a few months ago, ready to retire, and it was very sad,” she says, “she lost all the wonderful years of real [portfolio] growth.”

Pitch knows something about opportunity. As her business grew, all by referrals, she recruited her son, an ex-Marine who became a CFP in 2004. Joe joined his mother’s booming business 13.5 years ago. “She dragged me out of the industry [gemology] I was in,” Joe Pitch recalls.

The main thrust of the business is accumulation for retirement–then distribution, the elder son says. “We are not a big fan of annuities. Clients come to us with annuities sold to them by another planner. It may not be the most appropriate thing for them. We don’t want clients incurring any extra charges on an already costly product,” he says.

When everyone got away from that in the 1990s and focused on “how many Internet stocks can I own?,” the Pitches never really “swayed from” a diversified mix of small-, mid- and large-cap stocks and bonds–whether municipal, corporate, or U.S. Treasury–reflecting value and growth investing. “Some people came in who had disastrous experiences when the bubble burst. We were actually the benefactors of that. We were able to put Humpty Dumpty back together again,” the elder Pitch says. “Asset diversification is important to reduce volatility, that is what we practice and it has worked out well,” Joe Pitch adds.

For their relatively new business of serving special-needs clients, which they hope to grow, the Pitch team restructures portfolios that were 100% equity-based to reduce the risk. “Diversification is very important–it is even more important in a special-needs case–[the portfolio needs to be] properly diversified to reduce that risk,” Joe Pitch says. “Special-needs people are [in general], fairly young. The money needs to grow to pay for long-term needs, medical needs, trips, hobbies, have income–anything to enhance their lives–and have growth as well,” Micki says. On the investment side, it’s pretty much the same: low volatility, diversification, and a strategy to minimize tax but still have growth and a rebalancing the portfolio as it becomes necessary. “Special needs people are living a more normal life span [than in the past],” Micki says. A lot of their needs are covered by Medicaid so the investments made are geared toward things “mostly to enhance their lifestyles.”

The Pitches look for products that have “lower internal costs” than annuities. “We like to allocate across global, international, big cap, small cap,” and invest in no-load funds as well, she says.

“Let’s say they [special needs clients] come in with a 401(k) plan–we help them allocate their 401(k) money because there is a big need for that. Lots of companies show investment choices but offer no guidance. “If there is a really great global fund in their 401(k), we will utilize that,” she says.

The firm looks at all the variables–age, tax bracket, long- and short-term goals, and so on. “If you have come to make money overnight, you’ve come to the wrong place,” she says.

Elizabeth D. Festa is a freelance business writer based in Washington, D.C. She can be reached by e-mail at [email protected].

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