WHEN EDUARDO RAMOS started his advisory firm five years ago, he had one goal in mind: to help other Hispanic entrepreneurs. It turned out to be a savvy business move for the former Johnson & Johnson international accountant.
Today, Mr. Ramos, 50, born and raised in Puerto Rico, splits his time between offices more than 2,000 miles apart — in Chicago and San Juan — serving more than 100 clients. Their assets range from $10 million on the high end to as low as $100,000.
His clients are small-business owners, doctors and other professionals, many of whom he has connected with as a member of the Illinois Hispanic and Puerto Rican Chamber of Commerce and as a member of the Puerto Rico and Florida Society of Certified Public Accountants.
The fact that Mr. Ramos himself came from humble beginnings to found Freedom Advisory LLC resonates with clients.
“We know what it takes to make it,” he said. “Because I am an entrepreneur, I do understand the intrinsic problems they have in creating their own businesses.”
That's helped him compete against the bigger broker-dealers and wirehouses, which are making an increasing push into the Latino marketplace. For example, Edward Jones, which has 12,000 representatives, is focusing more on the Hispanic market.
It's not hard to see why Hispanic clients are starting to draw a lot of attention. They are one of the fastest-growing ethnic groups in America. About 16% of the U.S. population is made up of Hispanics, according to the 2010 Census — a 43% increase from the 2000 Census.
20% OF RETIREES BY 2050
They are also the fastest-growing ethnic group at or near retirement. Hispanics, as a percentage of retirees, are expected to grow to 20% by 2050, from 7% in 2010, according to the Census Bureau.
Focusing on Hispanic entrepreneurs presents a few small challenges. For one, many of them are only just starting their careers, so they don't have the assets to meet high minimums. It's these up-and-coming entrepreneurs who present the biggest opportunity for advisers such as Mr. Ramos.
“There's a misconception that it's very difficult to become well-off, but you have to start somewhere,” Mr. Ramos said. “Once they start to accumulate assets and see the compounding factor of their earnings, they're going to start to make more contributions.”
Hispanics also have a unique view of retirement, Mr. Ramos said. Typically, they aren't focused on turning 65 and riding off into the sunset. Instead, the majority plan to continue working in some capacity well into their elder years.
“They do semiretire,” Mr. Ramos said. “They are entrepreneurs that have been working very hard to make it. They're keeping the business and keeping the cash flow working.”
That changes the way advisers manage assets for retirement.
“It's a factor,” Mr. Ramos said. “If you have an older client who's still making money, you can position the portfolio for more risk, since he doesn't need the same cash flow a full retiree would. They're in a much better position. If you're semi-retired, you could do well with a 3% or 4% withdrawal.”
Mr. Ramos' firm got off to a rocky start, though, thanks to some terrible luck. After 25 years working as a certified public accountant, Mr. Ramos launched the firm in May 2008, just a few months before the worst financial crisis since the Great Depression.
“It was a real tough act,” he said. “Not only being newly into business, but, needless to say, most clients were skeptical about putting money to work. It took a lot of convincing on my part.”
Those clients who did listen to Mr. Ramos have seen their faith pay off handsomely, because they were invested during the market rally, unlike so many others who went to cash and have yet to get fully back in.
Not that Mr. Ramos is willing to take too much credit.
“It's very easy to look back and say how good the market has been, but it's always been very cloudy,” he said. “Every other quarter, we have a crisis.”
Shortly after the doldrums of the financial crisis, Mr. Ramos opened his Chicago office.
“It was a good point to be close to different states and different areas that were not particularly serviced by Hispanic advisers,” he said.
JOSE CIMADEVILLA was one of Eduardo Ramos' first clients when he opened Freedom Advisory LLC more than five years ago. Mr. Cimadevilla, owner of a business in San Juan that manufactures and assembles office furniture, first met Mr. Ramos, or Eddie, as he calls him, more than 20 years ago when he hired him as an accountant to help with his newly founded business.
“He always liked the stock market; he always had an attraction to that,” Mr. Cimadevilla said. “He would even consult on a few things.”
When Mr. Ramos decided to get into the advisory business, Mr. Cimadevilla jumped at the chance to broaden their working relationship.
NO COLD CALLS
As a small-business owner, Mr. Cimadevilla has always been the recipient of a lot of cold calls, which are still in vogue in Puerto Rico. Mr. Ramos offered an opportunity to work with someone who went beyond just selling products, but who also could help build a financial plan for the future and understood the needs of a small-business owner.
“We get a lot of hard sells in Puerto Rico,” he said. “I get a lot of calls from brokers in all kinds of small outfits. Those guys are really just pushing products. Eddie understands the business; he also knows our personal situation. He understands where we stand and where we want to go.”
Where Mr. Cimadevilla, a married father of two, wants to go is into semiretirement.
“I'd like to see the day come when I only come into the office a couple of days a week,” he said. “We do have the investment positions to retire in two or three years, if need be.”