Annual Report Thomas Point Shoal Light the Most Recognized Lighthouse in Maryland
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COVE POINT LIGHTHOUSE THE OLDEST CONTINUOUSLY OPERATING LIGHTHOUSE ON THE CHESAPEAKE BAY 2016 ANNUAL REPORT THOMAS POINT SHOAL LIGHT THE MOST RECOGNIZED LIGHTHOUSE IN MARYLAND WE ARE PLEASED TO PRESENT TO YOU OUR 2016 ANNUAL REPORT HIGHLIGHTING SUCCESSES & CHALLENGES, AND RECAPPING A REMARKABLE YEAR. OUR 29TH YEAR TOGETHER WAS AN UNQUALIFIED SUCCESS, DELIVERING STRONG RESULTS AND EXCEPTIONAL GROWTH. FOR THE FIRST TIME, THIS SUCCESS WAS RECOGNIZED ON A NATIONAL SCALE IN RECEIVING ONE OF INVESTMENTNEWS Magazine’s 12 BEST PRACTICE AWARDS. We made solid progress in 2016 and are proud to report we succeeded in meeting four of the five business goals we set last year. For the first time in six years we added a new Financial Advisor to our growing team, and six of our professionals were presented with the prestigious Five Star Wealth Manager award. Our investment performance excelled in a challenging market, rewarding our clients for their discipline and patience. We completed the successful rollout of our new, improved client portal. We welcome the 13 new client families who joined us in 2016! We hope you enjoyed your first year with us and look forward to many more. This year, we celebrated six retirements, four marriages, seven graduations, one business sale and the birth of over a dozen children and grandchildren. We also mourned the deaths of nine client family members. Standing beside our clients during times of joy and sadness is among the many reasons we cherish what we do. We expanded our geographic footprint with the opening of an office in Midtown Manhattan. We have had a strong client base in NY and NJ for many years, and this presence helps us serve them better and continue to grow. BERMAN MCALEER received added recognition in the national spotlight with one of our partners chairing the Financial Planning Association’s national conference. The meeting attracted more than 2,000 prominent financial advisors to Baltimore, with an estimated $1.6 million of financial impact to the area! As pledged in last year’s annual report, we will continue to actively support our great city. 2 | FIRM UPDATE OUR FIRM BEGAN TO REALIZE BENEFITS FROM THE FORMAL MANAGEMENT STRUCTURE WE IMPLEMENTED IN THE PRIOR YEAR. OUR CLIENT RETENTION RATE REMAINED HIGHER THEN THE INDUSTRY AVERAGE, COMING IN AT 99.5%. We grew our team and promoted internally to maintain the high level of service and attention our clients expect. Judy Brown joined us early in the year as Senior Financial Advisor with 25 years of industry experience. Susan Mitcheltree became an Equity Partner of the firm, further expanding our management and ownership team. After six years in our investment management department, Brett Holmes, CFP® joined our planning team as our 8th financial advisor. We welcomed Danielle Fitzpatrick and Mark Lingenfelter to our client service team. Danielle joins Ashley Wilkinson in the Client Service department headed by Terri Cook, as well as working with Dawn O’Farrell in our insurance operations department. Mark is the friendly face greeting clients in our Midtown Manhattan office, delivering the same great first impression that Joyce provides in Baltimore. It was another great year for BERMAN MCALEER in the media, with our advisors being sought for their input on a wide range of stories in The Washington Post, The Baltimore Sun, TIME Magazine, The Baltimore Business Journal, ABC2 News, and The Wall Street Journal. After two years on the Baltimore Business Journal’s “Best Places to Work” list, BERMAN MCALEER came in first in our category! The Business Journal also ranked BERMAN MCALEER among the Top Investment Advisory Companies and Top Financial Planning Companies in 2016. Nationally, we were proud to accept the Ascend Award for “Firm of the Year” from Kestra Financial, one of the country’s largest organizations serving more than 1,400 independent wealth management firms nationwide. We donated the $5,000 award to the National Aquarium’s Urban Wetland Project as part of our drive to support our home city. Most notably, we were honored to receive one of just 12 prestigious InvestmentNews Best Practice Awards. These respected, national industry accolades solidify our team’s dedication to each other and our clients. CLIENT RETENTION RATE 99.5% GROWTH OF BMC ASSETS UNDER MANAGEMENT TOTAL CLIENT FAMILIES 413 OVER THE LAST 5 YEARS M 800 2016 NEW CLIENT ASSETS $51,520,000 M 750 2016 TOTAL CLIENT ASSETS $745,194,000 1 M ENTS M 700 M ANAGE 650 M M ADVISOR & FIRM METRICS 600 UNDER Industry Average* BMc M 550 ASSETS PER PROFESSIONAL $85MM $58MM ASSETS M CLIENTS PER STAFF 22 30 500 M BUSINESS DEVELOPMENT EXPENSES $0** $68,000 450 M *Data from InvestmentNews Research 2016 Financial Performance Study 400 **We are a referral-only practice 2012 2013 2014 2015 2016 1 Represents individual family assets. Retirement plan assets total an additional $591 Million through our 401(k) affiliate, Justin Retirement Services LLC. STATE OF THE FIRM | 3 CONCORD POINT LIGHTHOUSE STRATEGIC DECISIONS IN LATE 2015 AND EARLY 2016 PROVED BENEFICIAL TO OUR CLIENT PORTFOLIOS. THOUGHTFUL INVESTMENT SELECTION AND ACTIVE PORTFOLIO MANAGEMENT ALLOWED US TO CAPITALIZE ON THE MARKET SHIFTS IN 2016 TO THE BENEFIT OF OUR BOTTOM LINE PERFORMANCE. Our assets under management rose nearly 10% in 2016 and we finished the year at just under the $750 Million threshold for the first time. Maintaining low ratios of clients per advisor and clients per staff member allow us to continue our ongoing commitment to exceptional financial planning advice and high-touch service. The economic and political stage proffered no shortage of headline grabbing news in 2016. January provided one of the worst starts to any year with the performance of the S&P 500 down over 9% in the first five weeks of the year. While money fled the market in droves, we were able to profit from the rebalancing opportunity and benefit from others’ lack of discipline. In June, the Brexit vote led a knee-jerk decline in global markets. As always, we remained calm and focused on the long-term. The U.S. election followed shortly thereafter with another opportunity for investors to miscalculate and react. Both episodes played well into our disciplined approach, and contributed to an exceptional year for our portfolios. We continue to seek and employ the best investment strategies available leading to a mixture of both passive and active investments within our OUR ADVISORY Team’s TENURE portfolios. Furthermore, we were quite tax efficient in 2016, benefiting from INDUSTRY FIRM increased use of passive investments (ETFs and index funds) in the long-term YEARS YEARS segment of our portfolios. DAVID BERMAN 29 29 JOE MCALEER 29 29 The industry was divided by the announcement of a new Fiduciary Rule by the Department of Labor that was set to be one of the most impactful DREW COOK 16 16 industry changes in a generation. We welcomed the announcement, PATRICK MONAGHAN 19 15 which would have posed relatively minor changes to a firm like ours that MELANIE HAGAN 25 10 accepted the fiduciary responsibility years ago to act exclusively in the best interests of our clients. The implementation of the rule has now been SUSAN MITCHELTREE 13 6 stayed by the new administration, and we plan to advocate tirelessly for BRETT HOLMES 6 6 its reintroduction in a more practicable form. JUDY BROWN 25 1 “EXPERIENCE IS THE DIFFERENCE BETWEEN KNOWLEDGE AND Wisdom.” 4 | INVESTMENTS & ADVISORY SANDY POINT SHOAL LIGHT OUR OPERATIONS Team’s TENURE INDUSTRY FIRM CLIENT SERVICE YEARS YEARS Delivering an exceptional client experience is the highest priority at BERMAN ROBIN KARMAN 22 21 MCALEER. This year, we extended our paperless office efforts by offering DAWN O’FARRELL 15 15 e-signatures via mobile devices, in addition to improving the platform that allows TERRI COOK 29 11 for electronic delivery of statements and confirmations. KIM SILVESTRI 11 8 JOYCE CONNORS 7 7 We significantly improved the remote meeting experience for out-of-state clients. The web-based meeting platform is working so well that even clients from around ASHLEY WILKINSON 7 3 the Baltimore Metro area are using it. More enhancements are planned. DEANNA DOMINGUE 3 3 TYRELL HOWARD-FRANKLIN 3 3 Our next task is to improve the scheduling process, using the latest technology to DANIELLE FITZPATRICK 5 1 help coordinate calendars and make the process more efficient. MARK LINGENFELTER 5 1 CLIENT PORTAL We significantly enhanced the online client portal that clients use to access their portfolios in 2016. We plan to add more capabilities over time, including the ability WHERE OUR CLIENTS LIVE to aggregate outside accounts and use the portal as a central hub for our financial 68% IN MARYLAND planning work together. 6% IN NEW YORK / NEW JERSEY SECURITY & TECHNOLOGY 6% IN FLORIDA We continue to carefully evaluate and implement technical advances in our industry. 4% IN PENNSYLVANIA In keeping with evolving best-practice standards, we have been aggressively migrating our data and records to cloud-based platforms with cutting edge security 4% IN VIRGINIA features. Our goal is to complete this multi-year process by the middle of this year, 12% IN 21 OTHER STATES with benefits to both cyber security and access. “EXPERIENCE IS THE DIFFERENCE BETWEEN KNOWLEDGE AND Wisdom.” FIRM OPERATIONS | 5 SEVEN FOOT KNOLL INSTALLED AT BALTIMORE’S INNER HARBOR AS A MUSEUM EXHIBIT. FIRM MILESTONES 1988 David and Joe meet at Maryland Financial Group 1995 Robin Karman joins firm management 2000 Berman Financial Group established 2002 David