Park Ave Magazine Interview with Cannataro Family Capital Partners

Park AVE Magazine

I had the pleasure to interview Lou Cannataro, ChFC®, REBC®, CLU®, CASL®, AEP® CLTC®, RICP®, ChSNC®, MBA®, Founder & of Partner Cannataro Family Capital Partners with Northwestern Mutual.

Lou has been helping clients achieve their lifetime and business goals for over 30 years. He and CFCP have received national recognition, being named to Forbes Top 250 Financial Security Professionals and Financial Times Top 400 Financial Advisors across the nation. Lou is also one of the most credentialed advisors in the country with nine advanced degrees and/or certifications in personal and business planning. He has a long history of becoming a well trusted family advisor not only for individual families but for his business owners as well. Lou is uniquely certified and more importantly, very experienced in creating synergy between personal and business planning.

A standout in the industry, Lou brings over 60,000 hours of face-to-face meetings/experience to each meeting. His ability to utilize this experience and level of empathy demonstrated for his client’s goals and mission in life is evident in every conversation. Lou is known for his low-key, no-nonsense approach to planning. He brings clarity to complex issues and provides transparency to the inner workings of each topic. And yes, he is also known for his “colorful language” that he uses to bring home some important points now and again!

Park AVE: Please share your company background with us.

Lou Cannataro: I worked through college as a Page at ABC-TV. I worked on all the shows and went to some of the best parties in NYC, back in the heyday of the television network. After I graduated, I was promoted up the ranks at ABC as they paid for my MBA in Finance. Once I graduated with my MBA, I started the business with Northwestern Mutual. As all the other business owners out there know, those early years are intense. If it was not for my wife Colette, who in the beginning was not only helping our business, had a career of her own at Lazard Freres, while busy producing and taking care of our 5 children, none of this would have been possible. We blinked, 30 years went by and here we are with a dedicated national recognized team that continues to serve and make a major difference in our clients’ lives.

Park AVE: 30 years is certainly a long time to be in the business. Please share some of your accolades with us.

Lou Cannataro: Cannataro Family Capital Partners (CFCP™) receives further recognition being named Forbes Top 250 Financial Security Professionals 2021 across the country and Forbes 2022 Best In State Wealth Advisor. These accolades come on the heels of CFCP™ also receiving the honor of Financial Times Top 400 Financial Advisor the last three prior years and all of this coincides with our 30th anniversary.

When considering the relationships developed between CFCP™’s clients, their family members and other trusted advisors, the only word that truly fits, is FAMILY.” For 30 years now, our team at CFCP™ has cultivated a dynamic family office that efficiently and effectively protects, manages, and grows family wealth.

The body of work developed over the last 30 years, the three generation deep relationships, and client testimonials are all the recognition Team CFCP™ needs to be empowered and stay the course for our clients! Adding the national recognition and awards earned over the years is motivating but, in the end, nowhere as important as what clients have to say about CFCP™.”

Park AVE: Tell us about your partner Aaron Bell.

Lou Cannataro: My partner Aaron Bell (ChFC®, CLU®, CLTC®, CIMA®, RICP®, WMCP®, MA), is also a trusted advisor tasked in not only educating and working alongside the decision makers within each family, but a pivotal player in bridging generational wealth™ from one generation to the next. I’m grateful for his dedication to each and every one of our clients and CFCP over the last 15 years.

 

Park AVE: Share with us the areas of expertise/services do you offer your clients.

Lou Cannataro: Our clients, have a dedicated team assisting them with their asset protection, estate planning, asset management, tax-efficiency, and multi-generational planning. Our clients have come to appreciate that when they call or email their Family at CFCP, we pick up the phone or answer the email in real time. We pride ourselves that we are physically in the office as a team (never closed due to COVID and all employees were back full time within 2 months of COVID lockdown). With a dedicated advisor for each family and with credentialed team members for every aspect of their planning needs, we provide top tier service. Our client’s value their relationship with us and most are life-long clients, shown clearly in that we are working with three generations within many of our client’s families. We have come to develop a deep relationship and more importantly, an understanding of not only the patriarch’s or matriarch’s philosophies/mission, but their children and grandchildren’s concerns as well.

Park AVE: I know many people with retirement plans are certainly stressing right now. What advice can you give to those?

Lou Cannataro: The bottom line is worry does not solve concerns. One must make a list of their perceived obstacles and concerns, then go back to the planning. Addressing your concerns, mapping out the preferred outcomes, and then taking the correct steps in accomplishing those goals, are the only things that can release you from your fears and worry.

Park AVE: What “safety” advice can you give to the working class who are saving for retirement?

Lou Cannataro: Work into your plan how to deal with short term volatility. Volatility will always exist, however what causes it will differ year after year. Be sure you first have a one to two years of needed income in conservative investments. This is your first bucket that is the cushion against market volatility. Your second bucket of investments are funds needed for two to ten years, invested more aggressively. Your final bucket invested most aggressively is for ten years and beyond. Confidence comes from knowing you have a plan, short term assets that don’t move with the market and longer-term investments that have the potential of higher growth to fight off inflation and longevity.

Park AVE: Do you think we will continue to see the rise in inflation throughout the year?

Lou Cannataro: Yes, we will see this ‘hyper’ inflation now, but eventually I believe inflation will settle down to the 3 or 4 % range. The hyper inflation is coming from this economy finally trying to come back online and get all the gears in synch, while the Fed tries to remove the excess cash in the system by raising interest rates.

Let me provide my typical, big picture 40k foot view. What I am about to tell you… and three bucks will get you on the subway!” Nobody knows what is going to happen in the market tomorrow, next week or next year. When discussing the market, during the short run, the same opinion can seem right and then wrong along the way. However, when it comes to investing, the ultimate goal is striving to be right for the long haul.

— AN ECONOMIC METAPHOR —

Remember when COVID hit, that was a unique moment in our lifetimes where air traffic control simply grounded the economy. Then, this country and its citizens out maneuvered the naysayers. Many predicted vaccines and solutions to handle COVID would take five to six years to develop. With our ingenuity and desire to take off once again, we experienced one of largest, fastest dips in the US economy but recovered and prospered all in the same year.

Eventually air traffic controllers cleared the runways for takeoff. However, there is no way that this economy, consumers, businesses, and families could instantly get their world efficiently and effectively back flying again. This caused great disruption in what and how things were being manufactured, delivered, purchased, and consumed. Everything was out of sync, and we are slowly getting back to normal….a normalization of the market and the economy. Maybe there is/will be a “new normal” in how, where we live, work, and consume moving forward but it all will normalize. As we all know, change causes disruption and angst because most simply hate change. Overtime however, we adapt and eventually thrive due to change.

— MONEY POLICY AT WORK vs. INFLATION —

After taking interest rates to zero in 2008, the government had only just started increasing interest rates to begin minimizing their involvement in the marketplace when COVID hit. They had to take interest rates back down once again to zero. Now the government has finally returned to the task of increasing interest rates. Do know that was always the plan and must happen. We should look to live within an economy where the federal government’s hand in interest rates is neither artificially stimulating nor suppressing the market. We prefer interest rates that are neutral, possibly somewhere between 2% to 3%.

We cannot have artificially suppressed interest rates for long periods of time. This will create too much money chasing too few goods, which causes prices to increase (inflation). You couple low interest rates with COVID-related inventory shortages, order backlogs, excess forced consumer saving (gallivanting during COVID was impossible) plus low-cost debt with increased demand, inflation will occur. If left unchecked, this could allow long-term inflation to set in.

One of the Fed’s primary goals is to keep inflation at bay, as they strive for full employment. As they begin to raise interest rates to accomplish these two goals, they also want to avoid pushing the economy into recession. This is not even close to an exact science! As the Fed tries to create a soft landing, touching down upon a neutral interest rate, the descent can/will be very choppy and the landing possibly a little rough! I still believe this heightened inflation is not going to become the new normal. You can already see the effects interest rate increases have had in a very short time frame. Treasury rates have gone up from 0.22% to almost 3%. Remember when you could get a mortgage rate with a two in front of it? Now it has a five. The market has begun reacting and pricing in these changes.

— “PASSENGER” SENTIMENT WHILE THE FED LANDS THE PLANE —

The last few weeks of very high volatility has led to an investment sentiment which is worse than the tech crisis, COVID, and even the 2008/2009 crisis. It is worse than 2008 when the system was broken and worse where a pandemic with tremendous unknowns on every level (even the St. Patrick’s Day parade could have become a distant memory) was on the doorstep.

Why is the sentiment so negative? The market indicators (gauges if you will) reflect great turbulence but also the possibility of continued growth. The turbulence includes the current market volatility, hyper media attention on inflation, excess inflation rocking our world, the Ukrainian war, China, labor costs at dramatic highs, and let’s never forget the ongoing political unrest in our country.

I do understand the concern as our plane gets absolutely rocked with some passengers visibly shaken watching others reaching for the airsickness bag while the media on board screaming on every vibration.

There is great market volatility, and especially in those stocks that have soared during COVID. But let’s face it, they gained a much higher valuation which is increased by predicted future business/growth. Well, guess what? Not everybody in this country ended up staying glued to a Peloton bike or are going to continue to hibernate binge watching Netflix. Some will even get tired of spending their Friday nights at Home Depot gearing up for the next DIY project. Tech firms that have great potential growth, but not turning a profit, looked enticing while they had the ability to access cheap money to fund the process. Well, cheap money is disappearing, and that ride is slowing down. Those companies that had over the moon valuations during COVID may have to come back down to earth.

As the Fed begins the landing, the passengers (that is you and I) are looking out the window, gripping our seats, unavoidably focusing on the turbulence, and hoping for the best. The initial descent will feel quick, dramatic and cause uneasiness, for we are quite high up. However, as the Fed gets closer to the landing strip, that is when they will begin to slow down watching the gauges being more subtle on their final approach. As we get even closer to the ground, like a pilot, the Fed will strive to enter the flare. This is where the nose of the plane is raised, slowing the descent even more, leveling off and striving for a safe landing. The landing may not be pretty but if history repats itself, we will land safely.

— FOCUS ON THE FINANCIAL CONDITIONS —

The pilot’s (and your planning/investments) ultimate focus should be on the runway and the landing. Better put, the main focus is on the following gauges (financial conditions) to assist us in landing safely:

• Economy
• Policy
• Valuation
• Market

Quick thoughts on each:

Economy

• Jobs are up; over 70% of firms are hiring
• Unemployment is low
• Inventories are up
• Backlogs are down
• New orders are down

We are slowly beginning to get back to normal demand. The demand for consumer goods, that jumped dramatically during COVID, is going to begin to slow. Now people will be spending money on services. Why, because we can! I don’t know if you remember, but when COVID started, I mentioned the fact that we would get through this. More importantly, that when we came out on the other side, you and this economy were going to be shot out of a cannon. Many are strapping on their helmets right now looking to light the fuse!

Policy

The Fed is tightening. The Fed said that they are not going to increase by 0.75% which was discussed but move in a less aggressive 0.50% fashion. They are doing what needs to be done to land but unfortunately turbulence will be unavoidable.

Valuation

Valuations are decent. Some stocks were overvalued and are getting beaten up dramatically. Like any other market, in any other given year, which stocks and sectors are winning and losing are going to trade hands. The market is already factoring in current headwinds, striving to re-predict the future. But current valuations are becoming logical. Some stocks were the great “stay home” stocks during COVID. And remember, “during COVID” is now over a two-year time span. It only feels like yesterday, but many stocks rode the COVID wave. Well, every wave comes to the shore. It is time, for some companies to paddle out again, and go find that new wave.

Market Structure

I believe we still may have potential for growth with the acceptance eventually there has to be a recession…when and for how long nobody knows. However, if there is a recession, it could be mild and/or short-lived. Also, no matter how long, a market down turn has consistently created investment opportunities for the long term investor.

–-BOTTOM LINE–

The financial conditions will be monitored on descent. But just as important (and I propose to you, even more important), is what are your personal gauges such as timetable, risk tolerance, and long-term goals saying. Again, I cannot stress enough in times like this (and we have had these similar conversations numerous times over the last 30 years) the three biggest assets to have when investing are a well-coordinated plan, time, and diversification

If one is reacting to short-term market volatility, you are already well-off course. One should not be reactive, but proactive with their planning and investments. One should have already planned for market volatility. When turbulence hits your wings, you should already have the confidence in your well-coordinated plan, built in the correct timetable for invested assets to weather the short-term volatility and coupled this with an overall well-diversified approach.

Your focus should not be on the turbulence (although we always monitor) but on flying, staying on course for that safe landing wherever your destination may be in the future.

Park AVE: What does Cannataro Family Capital Partners offer that some of your competitors don’t?

Lou Cannataro: Like other wealth management firms, we have access to public traded investments (stock, bonds, mutual fund, ETF’s etc.) as well as hedge funds, private equity, and private debt investments. We also have access to the insurance universe when it comes to one’s defensive planning. In the end, these are simply the tools and tactics of the trade.

The real difference is being able to work with someone who is credential in all aspects of planning, backed by a team of professionals that knows your family on an intimate basis. Many referrals have come to us because their existing advisor truly was not advising on the entire picture, but simply was looking to manage investments or write insurance. They may touch upon overall planning, but the conversation typically leads back to “market talk” which people love (it is human nature!). I have been in many advisor conferences and often have heard them say, “It is not what you say but you how you say.” At CFCP, we look to turn that philosophy around and eliminate the smoke and mirrors. We believe “How you say it should reflect the simple, easily understood, very effective and utter truth.” If you cannot successfully advise your client with those principals, then you are in the wrong business.

We also have provided great continuity for our clients over the last three decades. When one is working with an advisor at a very large investment house or small advisory shop, the person that was handling their planning often moves on to other clients or leaves the firm. Families find themselves reinventing their financial relationship over time. Here at CFCP, you are working with an owner/partner of the business with all our advisors grown from within, not hired outside guns coming and going overtime. Continuity deepens relationships that can span generations not market cycles.

Park AVE: Please share with us your support of the Alzheimer’s Association.

Lou Cannataro: We are a flagship sponsor for the Walk to End Alzheimer’s in New York City.

For me, this issue is personal. My brother Gene is one of the six million Americans living with Alzheimer’s. I’ve seen firsthand how this disease affects him, his wife, children, and our entire family.

And it’s not just me. Many CFCP Team members and our Family of clients have family or know someone impacted by Alzheimer’s. And that’s why we chose the Alzheimer’s Association. For more than three decades, we have supported local charities and worked hard to be a positive force in our community.

And we’re going to work even harder this year for the Walk to End Alzheimer’s. We’ve pledged $100,000 to help reach out One-million-dollar goal, because we know how much families are counting on an end to this disease.

Please join us in the fight to end Alzheimer’s
2022 Walk to End Alzheimer’s – Manhattan, NY: Team CFCP for Gene | Walk to End Alzheimer’s

The top 10 fundraisers on our team, can earn one of the 10 spots we have in the NYC marathon. This is cool for historically, one usually must qualify as a runner to get in the marathon, but our top fund raisers or donators can run (or pick whoever they want to run) without qualifying.

Park AVE: Thank you for your expertise and taking the time to speak with me.

Lou Cannataro: It was my pleasure and I look forward to speaking with you again!

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Lou Cannataro and Aaron Bell use Cannataro Family Capital Partners as a marketing name for doing business as representatives of Northwestern Mutual. Cannataro Family Capital Partners is not a registered investment adviser, broker-dealer, insurance agency or federal savings bank. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life and disability insurance, annuities and life insurance with long-term care benefits) and its subsidiaries. Lou Cannataro and Aaron Bell are Insurance Agents of NM. Investment advisory services provided as Advisors of Northwestern Mutual Wealth Management Company®, (NMWMC) Milwaukee, WI, a subsidiary of NM and a federal savings bank. Investment brokerage services provided as Registered Representatives of Northwestern Mutual Investment Services, LLC (NMIS), a subsidiary of NM, broker-dealer, registered investment adviser and member FINRA and SIPC. There may be instances when this agent represents companies in addition to NM or its subsidiaries.