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Dr. Edward J. Clemons, 44, was doing well operating his dental practice in Durham, North Carolina. But all his business success didn’t exactly prepare him for the challenges he faced a few years ago. With three children, one of them college-aged, Clemons had to figure out how to pay for their college education. And due to a whopping $60,000 loss at the hands of his financial adviser in 1998, he was eager to clean up a quagmire of financial mistakes.
Clemons’ adviser had invested his portfolio primarily in start-up pharmaceutical companies, which he described as “having great potential if they develop but no history of performance.” Although Clemons was making a good living running his business and serving as the president of the Durham Academy of Medicine, Dentistry and Pharmacy, the gamble left a modest $70,000 in his portfolio.
Looking back at his relationship with his financial adviser, Clemons says it was “difficult, because he didn’t seem to be hearing what I was saying. He was putting me into [investments] he wanted me in rather than what was in my best interest.”
When Clemons learned that LaShana Broussard-Morris, a financial consultant with Smith Barney, was interested in addressing the Durham Academy later that year, he was more than happy to hear what she had to say. “When I spoke to Ms. Morris, I realized that her philosophy was more in line with my goals.” At a follow up meeting with her, Clemons outlined his goals and made out a financial profile. From that, she developed a portfolio plan for him, which included his retirement, his children’s education fund, a growth fund, and an account that Clemons manages with his adviser’s supervision.
Broussard-Morris saw that Clemons’ financial affairs needed a thorough reorganization. “I realized that what he needed most was structure,” she says. “He had a college-aged child (now a 21-year-old graduate student) and two younger children. I went for a diversified approach to blend in with his aggressive risk profile.” Morris used an asset allocation model comprised of 80% stocks; 11% balance mutual funds, which included the Smith Barney Aggressive Growth Fund (SHRAX); and 9% cash. Some of the companies in Clemons’ portfolio include Biogen (Nasdaq: BIIB), New York Community Bancorp (NYSE: NYB), and insurer American International Group (NYSE: AIG). The $70,000 he had when he met Morris mushroomed into $200,000. It includes a retirement account for his wife, who is the office manager of his practice; his own SEP/IRA; a SEP account for his two employees; and 529 plans for each of his two youngest children, to which he contributes between $2,000 and $3,000 a year.
Clemons has also incorporated real estate into his investments. He owns the $350,000 building that formerly housed his practice, and his home, which has a similar value, was recently refinanced. To create another income stream, Clemons recently moved his dental office to a space valued at $500,000 in a more upscale neighborhood, and he leases the old building to ensure that “good real estate would be available
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