Former United Pilot Robert Thomas has expanded his advisory practice from airline employees to ExxonMobil credit union members.
It's not every day that a financial advisor gets offered the chance to take financial planning to six offices so early in his career. But Robert Thomas, a retired pilot, isn't just any investment advisor.
The ink on his retirement paperwork at United Airlines, where he'd piloted commercial jets for the past two decades, was barely dry last August when he was offered the opportunity of a lifetime: Come to Houston and build out six financial planning offices for the credit union owned by ExxonMobil's 17,000 employees, executives, retirees and their families.
The opportunity wasn't lost on Thomas, who has been a CFP licensee since January 2005 and has been building his financial planning practice since 2002, mainly working with current and former United Airlines employees.
The credit union executives also viewed hiring Thomas as an opportunity for them. Up to this point, with only a 25-year-old mutual fund salesperson in place, the multibranch credit union wasn't providing ExxonMobil employees with the financial planning they needed as they accumulated significant nest eggs. In fact, the credit union didn't even offer individual retirement accounts (IRAs) until Thomas came on board last October-despite the fact that many members have assets worth six or seven figures.
Now all that's changing. "The demand for financial planning is just huge here," says Thomas, who is affiliated with AIG Financial Advisors and moved to Houston with his wife, Elizabeth, late last year to start building his multibranch credit union planning practice. "There is a vast pipeline of folks coming from ExxonMobil who are retiring or starting a business and need assistance," Thomas says.
And there is another critical but common characteristic of many ExxonMobil employees that deserves planning attention: Many accumulate and often retire with significant amounts of ExxonMobil stock, much of it held for years or even decades, but many have never talked to a financial advisor.
For Thomas, the opportunities may get much bigger. Since Thomas' credit union is a designated service organization (CUSO) that provides services to 60 other participating financial institutions, Thomas very well may be called upon to clone the financial planning model he is building for as many of those credit unions as need and want his services. "We know the floodgates are opening, so we're working very carefully to say, 'How do we build and manage this properly?'" Thomas says.
While few credit unions have found the right partnership when it comes to offering financial planning services, executives know there is a significant pent-up demand for investments and advice among their members. Because members actually own the institution where they do their banking, their loyalty, should planners like Thomas be able to win it, will be a lucrative asset.
There are 8,662 credit unions with $650 billion in savings and about $580 billion in outstanding loans in the U.S. In 2006 alone, credit union money market accounts grew by some 15%. But since most credit unions are operating without even fundamental investment products, such as IRAs, executives know that planning and investment opportunities among their members abound.
Randall Dixon, who heads up the ExxonMobil employee-owned Energy Capital Credit Union, believes that the opportunities to assist credit union members with their financial planning needs are boundless, and that the partnership with Thomas is the best way to address those needs. "We knew we had to find a way to serve our members quickly, beyond savings and lending," says Dixon, who led the search to find a comprehensive financial planner.
There was growing concern that credit union members were not happy with the financial services offerings they had. When Energy Capital asked them in a survey what was missing, they said overwhelmingly: "We want effective financial planning solutions," Dixon says. "Those were the marching orders when we recruited Bob." What was also clear was that their folks wanted and needed a CFP-level person and not the Series 6 licensed salesman they'd had before.
How did Thomas get the job? In a sense, he was in the right place at the right time-for decades. After he served as an Air Force fighter pilot in Vietnam, the Thomases settled in Houston and opened a pizza restaurant. Then they hired Charles Dixon, Randall's brother, to do their taxes. Several years later, both Thomas and his wife, Elizabeth, were hired by United Airlines and moved to Denver.
Still, they all kept in touch, and over the years Charles Dixon became so impressed with Thomas' investment aptitude he encouraged him to go into planning and get his CFP certification-something Thomas did by arranging his flight schedule at United Airlines so he could work at Charles' planning firm, Dixon & Company. Sounds like a simple arrangement, right? But at the time, Thomas lived in Denver. So working in Houston for Charles Dixon to fulfill the CFP experience requirement during the week took a rather large commitment-one that is paying off in spades now. Because as Charles Dixon grew to respect Thomas's planning acumen, so did his brother Randall.
So when it came time to find a planner to helm advisory services for the 16,000 credit union members, Thomas immediately came to mind. "I think sometimes we get confused and think we're in the money business," Dixon says. "But we're not. We're in the relationship business. We pick people here based on talent and their ability to serve and understand our members. I just got a letter from one of our retired members who just lost a spouse and she spoke in glowing terms about what Bob had done for her during her time of need. What we saw with Bob is that not only is he a talented planner, but that he takes the time to understand people's needs."
Thomas runs his own practice within the organization. By partnering with him, the credit union gained access to AIG's universe of investments, including IRAs. "We didn't have these accounts before, but with Bob, now we do," says Randall Dixon. That's a crucial offering since so many of the credit union's members receive lump-sum distributions from their pensions and need to be able to roll over the assets into tax-advantaged accounts. "Now we'll be able to establish these relationships and help members with these retirement needs," Dixon says.
Randall Dixon has been impressed with AIG overall, and accompanied Thomas on a recent visit to the Phoenix offices of Jim Cannon, the president and CEO of AIG Financial Advisors, to ensure everyone was on the same page.
They all came away impressed with the potential for growth. "I think Bob is one of those guys who has grasped the full scope of this opportunity quickly," Cannon says. "I think it's impressive to hear that there are clients coming in who don't have a financial advisor but who have $800,000 or $1.2 million to invest. Within the year, Bob will be able to set his client minimum at $750,000 and maybe assign junior planners to members who are still building assets at lower levels."
Thomas is appreciative of his broker-dealer's support. "AIG is totally supporting me. That's why we visited Phoenix. Jim said I want to learn more about credit unions. We're going to try to see how we can build on that synergy."
Thomas thinks the cover story Financial Advisor magazine did on him last year ( "Unexpected Turbulence," February 2006) had something to do with him being hired. Thomas' approach to life and investment planning for employees grappling with a near-defunct employer, his robust and straightforward professional outlook, and the fact that he managed to get his CFP while still flying full time so impressed us that we wanted to share his story with the rest of our readers. "When I went in for my interview, each member of the credit union board had a copy of the story open in front of them. I think it was just amazing how this article helped launch my career," Thomas says.
To maximize his time as he builds staff, he's been doing seminars and has trained the managers in each of the six credit union offices to fill his calendar with client meetings.
Solution- and needs-based financial planning is something the pilot became good at through necessity during his last three years at United, which was grappling with bankruptcy and a government takeover of its pension plans. He spent that time flying as he simultaneously launched his new advisory practice-which centered on helping fellow United pilots and employees weather life-altering pension reductions and gut-wrenching pay cuts. Pilots routinely had their pensions slashed some 70% (Thomas' own pension was chopped from $7,000 a month to $2,263). Pay cuts shaved as much as 50% off annual incomes.
Thomas, 62, says his work quickly became about helping people confront their financial and life-planning realities and encouraging them to move on to financial health. He helped them do cash-flow planning and spending projections and built out customized portfolios to shore up and protect whatever they had left. When possible, he also helped them diversify out of the United stock that had come to dominate so many of their portfolios over the years.
Today, he still keeps United clients in Sentinel, Colo., as he builds his Houston practice, which he says is growing. Thomas notes that he has "some of the same problems with ExxonMobil employees I had with United folks. They have a lot of ExxonMobil stock, so it's time to diversify. We have to sell some of their stock. They often don't like the idea, but it's a discussion that has to happen. It's a good starting point."
What Thomas may lack in years as a planner, he makes up for with an innate astuteness about money and investing and savvy tax-planning strategies. He helps his clients pare back taxes (using techniques like net unrealized appreciation) when they sell their ExxonMobil stock, and is equally good at ferreting out other challenges and opportunities. "With one couple, we just found another $65,000 they didn't know they had. They had delayed their distributions, but since they were in their seventies, distributions were being force fed out of their plan anyway and were being used to buy more ExxonMobil stock," Thomas says.
There are multiple opportunities for rollovers, since many employees have defined benefit and 401(k) plans with stock savings. But again, tax planning is critical, since some of the plans contain stock with a basis of $2 or $3 per share. "They're totally unaware of the opportunities for tax savings," Thomas says.
Another battle? "Keeping retirees, especially folks who have been through World War II, from loading up on too many fixed-income investments. I have to keep educating them on how it will kill their portfolio over time."
And then, of course, there is credit union member Lillian Vickers. Thomas' work with Vickers, a very aggressive 80-year-old investor, has centered on building a custom portfolio and estate plan and keeping her out of nanotechnology and from loading up on too many REITs. "She's brilliant, but my challenge with her is to dampen her down a little bit. We're working with her family now too, so it's a multigenerational relationship," Thomas says.
Vickers says simply: "I love Bob Thomas. Before Bob I had an account with a major broker-dealer, and the man I was working with sold a lot of my stuff and didn't tell me. I think he did it to get the commissions. Another broker invested me entirely in one mutual fund. I wasn't making any money, I'll say that. But I am now. Bob is open and explains everything he does. I'm still investigating nanotechnology and I'm interested in REITs, but Bob told me I didn't need to change things right now," says Vickers.
"What really amazes me is the number of single females who are retiring who have very sizable retirement funds, in the six and seven figures," Thomas says. "That goes for many employees who sometimes retire early. We have to get to them early enough so they can make all the right decisions."
If one thing is certain, it's that Thomas really does appreciate and respect an opportunity when he finds it. "The future is I'm really looking forward to expansion. This is a captive audience here. These folks bank with and trust their credit unions, so we really have a leg up."
So will Thomas be building one of the biggest advisory firms in Houston? "That's the goal," he says with a smile.