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Persuading conservative clients to accept some measure of investment risk is just part of the drill for most financial planners. Ian Quan-Soon, however, faces a different task. His New York City practice is packed with Wall Street traders and analysts-thrill seekers who thrive on risk. Quan-Soon must rein in these high-fliers, many of whom would like nothing better than to keep 100% of their assets in equities, preferably in initial public offerings and aggressively growing start-up firms. "These are highly motivated, high-powered people who want it all and are on the road to having it all. My job is to help them keep it and manage it". Quan-Soon says.    Although Quan-Soon’s financial planning career dates back only to 1986, he spent 10 years before that working on or near Wall Street, concluding with two years as an analyst at Drexel Burnham Lambert.

In his first job as a planner, with IDS, he quickly became a superstar. "I was named one of their top 50 planners, I ranked in the top 20% in production, and my client base grew from 45 in the first year to 300," he says proudly. Indeed, a number of these clients were people he had met during the decade he spent around Wall Street, and by now more than a few of them were earning several hundred thousand dollars a year. But as long as he remained at IDS, Quan-Soon was constrained by being allowed to sell only IDS products. "If you have clients with half a million to a million dollars of assets that belong in mutual funds, they look at you kind of weird when you tell them they should put it all into one fund" he says.    Quan-Soon concluded that the best way to offer his clients a broader range of investment options, while breaking the link between planning and production, would be to open his own advisory practice. However, he knew that staying afloat during the all-important first year would be a challenge. Like most financial service companies, IDS required its planners to agree in writing that, upon leaving the firm, they wouldn’t solicit the business of former clients for a period of 12 months. Of course, a client can take the initiative to follow the planner, but advisors sometimes discourage that for fear of appearing to have violated the non-complete clause. Thus, Quan-Soon knew that he could not count on doing any business with his former clients for the first year.    He could, however, stay in touch with them as friends, which many of his clients had become over the years. "During that first year, you don't have to stop talking to people. You just can’t solicit their business," he emphasizes. Knowing that many clients would wish him well in his new venture, Quan-Soon sought their help by asking for referrals of friends and relatives. "I wrote them, explaining that I had left IDS to form my own company and that I could not do business with them," he says. "But I also suggested that if they'd found my advice helpful in the past, perhaps they knew someone who might benefit from my services." Several former clients supplied names and most facilitated the initial contact by alerting the prospect to expect a call from Quan-Soon, who then followed up with the offer of a complimentary consultation. About 20 of these referrals became clients.   During his first year in private practice, Quan-Soon also conducted three seminars for the general public on retirement planning, wealth management, and estate planning. He hired a marketing firm to prepare invitations and mail them to targeted affluent areas of Manhattan, including parts of Greenwich Village, the Upper East Side, and the Upper West Side. He held the sessions on week nights at a private club in the heart of the city near Grand Central Station and 42nd Street. As an added inducement, Quan-Soon provided a catered meal. "When you offer dinner, you get good attendance," he says. Some 80 people attended each event and about eight to 10 from each seminar ultimately turned into clients.    Even with this moderate influx of new business, the first two years were a financial struggle. His wife’s income helped, though, and Quan-Soon had set aside savings to cushion the impact. "By the end of the second year, I had surpassed the income I was bringing in before," he reports. Today he has some 300 clients, just about the size of his client base at IDS. His compensation comes from a mixture of fees and commissions. He has a one-time charge of $350 to $1,500, depending on complexity to prepare a financial plan. It comes with what Quan-Soon calls a money-back guarantee. "I present the document and explain the reasoning behind my recommendations," he says. "If the clients don’t see the value and the benefit of the plan, they are entitled to it free." Since opening his doors in 1992, only one person has requested such a refund and that situation involved special circumstances.  If a client wants Quan-Soon to implement the financial plan, he will do so either on a commission basis or for a fixed fee of $150 per hour. About 95 of his clients go the commission route, which he believes is the better arrangement for everyone over the long term. "If I put someone into a mutual fund that pays me a hail, as I see it, I'm really being paid to keep track of my clients’ investment," he says. "I meet periodically with portfolio managers to hear their ideas on the economy their thoughts about specific companies in their portfolios, and where they re going to be putting their money. This helps me determine whether the fund is sticking to its objectives. That's added value that I bring to the table for my clients. The trails compensate me for my time."    Like many advisors, he also earns money for managing his clients' assets. Unlike most, however, he doesn't charge a fixed-fee percentage of assets. Instead, he ties his own compensation to performance. "I charge similar to what mutual funds pay on a 12-b trail, so if I don't make money for my clients, they don't pay me," he explains. Quan-Soon is reluctant to be more specific or even to discuss how many assets he manages. He won’t say what his income is either, although he does confirm that his total annual earnings are well into six figures.   He lives as well as works near Wall Street, maintaining an office in his home. He receives back-office support from his broker/dealer, Nathan & Lewis, but otherwise he pretty much runs a one-person shop. His entire staff consists of one high school student, a computer whiz who comes to Quan-Soon’s home office after school. "In this era of technology everything is stored in computers, so you don't need much space and you don't need a big office staff, " Quan-Soon says. Unlike some advisors, who try to conceal the fact that they work at home, Quan-Soon flaunts it. He invites prospective clients to meet at his home, claiming it helps them understand him better. "Financial planning is a very personal relationship, and I want people to feel comfortable with me before they give me their money to manage " he says. "I want clients to see how I live because I think decor and furnishings can reveal a lot about a person " For the same reason, he likes to see clients in their homes from time to time.    Some 100 of Quan-Soon’s clients reside as well as work in Manhattan, while about twice that number commute from the suburbs. Living as they do in Wall Street's orbit, they tend to be more financially savvy than investors in other parts of the country. "People in New York, New Jersey and Connecticut are constantly being bombarded with financial information," he says. As a result, they start thinking about investment issues sooner and seek help earlier than investment clients in other places. "My clients typically are in their late 20s or early 30s when I first see them," Quan-Soon reports. However, even by starting this young, the Wall Street traders and analysts don’t have decades to prepare for the future. Practically all of them have the same goal: financial independence by age 45. "Working on Wall Street produces high stress, high anxiety and high burnout, so they intend to stay for perhaps 15 or 20 more years and then start their own businesses in their mid-40s," he explains. FONT SIZE=+1>   Outsiders might imagine that these investment-oriented people dream of opening a boutique brokerage or launching an online trading service, but the truth is that most want to get as far away from Wall Street as possible. One of Quan-Soon’s clients expects to run a bed-and-breakfast. Another hopes to open an antique shop. A third plans to become a filmmaker. "They want to enjoy life instead of going into another high-stress situation," he says. To achieve these dreams will take between $1 million and $2 million. That's on top of what the clients must save to fund their children’s education, family security and their own retirement. But most have enough coming in to cover all these bases. "A 25-year-old starting out in Wall Street earns between $75,000 and $100,000, and by the time he or she is 30, that's probably up to about half a million dollars a year," Quan-Soon says.    Quan-Soon usually begins with retirement planning. Most of his clients are realistic enough to understand that they probably won’t get rich from living their dreams. While they’re willing to risk losing their silk shirts in their 40s and 50s, they want to know that they’ll be financially secure at 65. To help them achieve that, Quan-Soon advises them to fund their 401(k) plans to the legal limit and to do so as early as possible in each calendar year. The benefits of compounding out-weigh those of dollar cost averaging, Quan-Soon believes, and he notes that" someone making $500,000 a year can easily write a check for the full annual contribution on January 1."    Funding education is the next priority In most cases, Quan-Soon's clients have a 15- to 18-yeer planning horizon to prepare for college costs, since they typically come in before or soon after their first child is born. Given the income of his Wall Street clients, one might expect their kids to attend pricey private schools from kindergarten on. But public education in northern New Jersey, southern Connecticut, and Westchester County New York, where most of his clients with families live, is so good that the local schools meet their needs. To determine how much to set aside now to pay college costs down the road, Quan-Soon estimates the probable cost of four years of tuition and expenses at a top school like Harvard. He uses somewhat rosy projections, assuming 4% annual inflation in college costs (historically they’ve gone up faster than that) and a 12% return on investment. Then he calculates how much needs to be set aside each year. Like most advisors, he suggests putting education savings into aggressive value- and growth-oriented mutual funds while the children are young. Unlike many planners, he also recommends leaving the money there until the youngster's freshman year when he would reposition it more conservatively to protect principal. But what if the market drops at the wrong time, say in the child's senior year in high school? "Based on my experience and the history of the stock market, there is very little investment risk after 10 years," he contends. "If you systematically invest, so much money piles up in an account that even a 500 point drop in the market, like we had in 1987, won’t wipe out your gains."    He advises his Wall Street clients to protect themselves with a great deal more life insurance than they typically have when they first consult him. Not only do most of them have several-hundred-thousand-dollar mortgages on their suburban homes or Manhattan condominiums, but they also need to replace several hundred thousand dollars of annual income to protect their spouses and families. "Their insurance needs typically run into the $5 million to $10 million range,' Quan-Soon says. "This is in addition to whatever their present employers happen to provide because such policies typically are not portable. Generally people will have no coverage if they leave their jobs, which is likely, given that Wall Street is such a volatile employment situation" They also need at least six to 12 months of income in liquid assets to protect them in case they lose one job and have to look for another, which usually takes from three to six months. After taking care of these basics, his clients are ready to begin investing for financial independence in their 40s. To achieve this goal, Quan- Soon uses mutual funds exclusively for portfolios under $3 million. "I don't have time to stay on top of a lot of individual stocks and bonds like mutual fund managers do, so I would rather let them select the stocks,"' he explains. However when more than $3 million is involved, he does mix in a few carefully selected individual stocks to add a bit more pizzazz to the picture.   For the average person under 50, which includes his entire Wall Street client base, Quan-Soon believes the proper investment ratio is about 70% in stock mutual funds, 20% in bond mutual funds, and 10% in cash. Right now he would put about 60% of the equity component into growth funds and 40% into value funds, and he is comfortable with keeping more than half the portfolio in international funds. "The U.S. market is rather evenly priced right now so I am suggesting a ratio of 60:40 for international to domestic funds," he says. On the international side, he favors Europe and the Pacific Rim, excluding Japan. "It is going to be some time before Japan recovers, so in the meantime, the biggest bang for the buck is coming from Europe, where they will have to reduce interest rates because the economics are somewhat stagnant, and Asia," he notes.    More than a few planners and probably a majority of their clients might back warily away from so much emphasis on growth and international funds, but Quan-Soon hears the opposite complaint from his Wall Street risk-takers. "They crave excitement," he says. "They would rather pull completely out of slow-moving things like bond funds and money market mutual Funds and put 100% into stocks," he says. "I have to keep reminding them that they can't be too aggressive, because they are in high-risk jobs," he says.    In addition to his Wall Street clientele, Quan-Soon also does planning for about 250 Manhattan-based professionals, including physicians, attorneys, computer programmers, and music industry executives. Although these people have more traditional careers and more years to prepare for retirement, their portfolios tend to look remarkably similar to those of his Wall Street clients. "I basically take the same approach because, although they have more time, they tend to have less income," he says. Only a handful of them earn salaries that are comparable to those of the Wall Street analysts and traders. In fact, most make somewhere between $70,000 and $150,000 a year. Given the high cost of living in New York, there is not a great deal available for investment in this income range, so Quan-Soon encourages them to fund their 401(k) or Keogh plans fully. He also relies on aggressive growth mutual funds to help their smaller nest eggs increase more rapidly.   As a hands-on asset manager Quan-Soon does not believe in simply buying and holding mutual funds." All mutual fund families go through cycles where they are hot and cold in some areas, so you need to keep an eye on them and switch in and out from time to time if they are not meeting expectations," he says. He might move as much as two or three times over five years if lackluster performance warrants it.    Although Quan-Soon sees his clients face-to-face only about twice a year, he spends a good deal of time communicating with them electronically. For example, each quarter he sends everyone a consolidated report showing the date and amount of their original investments and the value of their assets at the end of the past and present quarters. In addition, he maintains a home page on the Internet (http://members.aol.com/iqfinsvcs/homepage) that contains information about himself, his company, and his near-term outlook on the stock market, which he updates monthly. A typical recent offering stressed the importance of dollar cost averaging.    Given the time it takes to actively manage his clients and their portfolios, Quan-Soon believes that the optimum size of his client base is between 300 and 400 people. Since he has already reached the lower end of this range, there is not much room left for him to grow, except by recruiting other planners who would work semi-independently under his direction. He would refer business to these associates in exchange for a share of the income they generated. He has already developed such a relationship with one advisor and hopes eventually to bring another five or six people into his organization. "I would only want to work with planners whose attitudes toward the business are similar to my own, and I can only know that by watching them over time," Quan-Soon says. "At the moment, I'm just keeping my eyes open."