Karl Frank, one of four principals at A&I Financial Services LCC in the Denver suburb of Englewood Colo., had to sort out a complicated family situation a decade ago after his father died.

His father, Tom Frank, had founded a successful law firm but hadn't planned for what would happen if he died or wanted to sell. When he died, Karl's mother ran into business and financial difficulties.

"It was eventually resolved, but I can't do enough now to help others avoid the kinds of problems my mother faced," says Frank. "Because my father died without a business succession plan, my mother was thrown into an overwhelming situation and the other attorneys in the firm suffered. Now, at A&I, we help business owners avoid this situation by making sure they talk to their spouses, delegate decisions and, in short, have a plan."

A&I has been in existence for more than two decades, but only began to offer fee-only services in 2004, which it now combines with its commissions. The firm now has $100 million in assets under management, $30 million with a percentage-based fee, and is growing at about $20 million a year, outperforming the goal of adding $1 million in AUM a month. Although the firm deals with a variety of clients, it has carved out a niche in the world of small business owners and business executives and even further refined that niche to service those looking to exit the business world.

"Nearly 80% of the business owners in the Denver area own small businesses, but investment banks do not want to handle these businesses that have $10 million or less in revenues a year," says Frank. "Many of these business owners are in their 50s or 60s and either are beginning to think about retiring or are ready to exit."

A&I has clients that range from a Marine with $2,000 invested, who Frank describes as a "client of the heart," to several clients with more than $20 million in overall assets. But most clients are small business owners with assets in excess of $2 million.

Working with the Business Enterprise Institute, a business exit planning firm based in the Denver area, A&I helps both those seeking a way out and those owners who are still in the game but need to create emergency plans in case something goes wrong. The firm handles the personal investments of the owners and some of the investments for the businesses and the employees. The firm hopes to expand in the future by taking the exit planning strategy to a national level and providing complete employee benefits packages for small businesses.

In the meantime, A&I is helping clients through the current economic turmoil. In part the firm has been investing in alternatives, but it has also benefited from the help of a proprietary system that got clients out of the market before it took a nose dive, putting many of them into cash investments. Now they are waiting for the opportune time to re-enter.

A&I has empathy for its clients because the firm itself is a small, family owned and operated entity. Art Rewinkel, Frank's father-in-law, co-founded the firm 23 years ago as a commission-based investment shop dealing in insurance and annuities.

"That was the way many firms operated then," says Rewinkel, who founded the shop with his wife, Inge, "but we were considering moving to an asset management style of business at about the same time Karl was graduating from the University of Denver. He became the catalyst for the firm making a major U-turn to move away from selling products to managing our clients' assets." Karl, who is a CFP, now works with five advisors and five support staffers, who manage assets for approximately 400 clients. Some clients choose commission-based and flat-fee accounts. Their fees vary based on the amount of assets invested, but are typically around 1%.

The last to join the family firm was Stacey Frank, the Rewinkels' daughter and Karl's wife, who started her career in marketing and public relations. She now handles the marketing and community outreach for A&I and is working on her CFP designation. The firm has working relationships with estate attorneys and business coaches. It handles taxes in-house and is especially proud of its ability to minimize the tax liability on investments and on the sale or transition of business assets.

"Some of our clients have started businesses from scratch that are now worth a considerable amount of money," says Frank. "They can be liable for a hefty amount of taxes when they want to sell the business if the proper planning is not done."

According to a recent survey published in Family Business magazine, 48% of family business owners worldwide who responded have no succession plan. Of those who do have some sort of plan, only 8.3% have a formal plan. More than 60% would prefer to leave the sale of the business to a professional rather than handle it themselves.

"We have a seven-step process for business planning," says Frank. "Many financial advisors or business planners want to skip some of the steps and go right to the ones that provide commissions. We take every step carefully."

One company that had its initial meeting with the A&I staff this fall has $20 million in revenues and 50 employees, but four of those employees are crucial to the operation and the two owners and four key people are no longer young. "We will talk with them about how to get the younger employees involved and we will set out priorities to draft a business continuity plan. They have to plan to protect those other 46 employees and create a value outside themselves," Frank explains.

"Another client has a medical services firm that grosses $2 million a year but depends completely on the two owners. They have four employees and we will work with them to structure it as a business that they can leave in a few years and be assured those four people will stay so that the business has a value."

Another A&I client is a business owner who took over an underground mapping company founded by his father. He now has a company worth $3 million and makes a substantial living off of it.

"But he does not know how to detach from the emotional side of running his father's company. He needed to determine how to run a business himself, but now he also needs to make it so someone else can run it and he can sell it and retire eventually," Frank says.

Yet another client owns a restaurant he has built into a $4 million to $5 million business. "Keeping in mind the current market concerns and downturn in businesses such as these, we will work with him over the next three or four years to maximize the value of his business so he can sell it and exit when he is 55, which is his goal," says Rewinkel.

To manage clients' investments, Rewinkel developed a proprietary system he calls "trend following."

"A&I has proprietary software so they can analyze trends that allow me to capitalize on downward markets, as well as make money when the market goes up," says Rick Lawler of Highland Ranch, Colo., who is the CFO for Summit Utilities, a small utility company. "They have created a portfolio for me that is a rare combination of being aggressive in its investments at the same time that it uses a conservative approach. This year has been a perfect example. While the Dow has been down 35%, my portfolio is up 20%. We converted to cash before the market declined and we will wait till we are in a good position to buy."

"For the moderate investor," Rewinkel explains, "trend-following strategies mean during an uptrend we buy an index mutual fund that seeks to provide investment returns that correspond with the NASDAQ 100 Index. During a down trend, we move into a cash position.

"For an aggressive investor, during an uptrend we buy an index mutual fund that seeks to provide investment returns that correspond with twice the NASDAQ 100 Index," he adds. "During a downtrend, we buy an index mutual fund that seeks to provide investment returns that inversely correspond with twice the NASDAQ 100 Index."

Frank also developed a portfolio of alternative assets and explains, "My approach to investments is to use mutual funds, ETFs, precious metals and currencies targeted to emerging areas of the world-anywhere that does not have a lot of debt. Argentina and other parts of Latin America are good now because they are running surpluses. China is appealing, but you need to find companies and funds that are making money off of internal demand, not exporting to the United States.

"I also like falling-dollar funds and currencies-accounts that go up as the dollar declines," he adds. "Those are good strategic decisions."
Stacey Frank arranges one event a month for A&I, including such things as seminars for investors. The firm is also actively involved in the Denver-Metro Chamber of Commerce. A regular event the firm sponsors is "Lunch and Learn" for clients, which can center on a wide range of issues. Bennett Braverman, an estate planning attorney in Boulder, Colo., went to a seminar just to see what the competition was up to and ended up as a client of A&I.

"Their presentation on 'trend following' got my attention. I would have said the concept was impossible, but if you know how the market operates, you can make a technical analysis and make predictions based on history," Braverman says. "I was with other financial planners and I was not happy with them. I even did it myself for a brief stint, but that was in 1991 and a lot has changed since then.

"I do not have time to do it for myself now, and Karl and Art have developed a portfolio for me that lets me participate in the market when it is going up and get out when it is not. They have an uncanny ability to predict what is coming and they moved me out of active investments just before the market went down. I also love that it is a family-based firm and they are all accessible."

Lawler, meanwhile, is exploring the potential of using A&I for a complete package of services for his utility's employees, providing them with benefits (or acting as a middleman with a benefits provider) and investing the 401(k) funds.

"Managing people's money is actually the easy part of what we do," Frank says. "It is the emotional attachment to a business and all of the other factors that make it complicated. But if we can make someone feel better about where they are in their investments and their business that is a huge gift we can give them."