When Cathy Pareto graduated from Florida International University in 1995 with a degree in finance, she decided to begin her career in banking and lending. “I quickly realized that I wanted to find a financial specialty where I could help people and make a positive impact in their lives,” says Pareto, who leads Cathy Pareto and Associates in Coral Gables. “That is when I moved into wealth management and financial planning.”
After joining a start-up firm, a local registered investment advisor with less than $20 million in client assets, Pareto helped grow that practice into a much larger enterprise before launching her own firm in 2007. “Becoming an entrepreneur in the field that I loved fulfilled my long-term vision of success,” she says. “I haven’t looked back since.”
Pareto’s clients are typically upper middle income and affluent professionals between 40 and 60 and private business owners. “We also work with a large number of same-sex couples and women in transition,” she says. “They are either already well-established or well on their way, and enjoy a comfortable lifestyle. Many other clients are already retired or near retirement and are looking for security and peace of mind.”
Pareto adds that being successful in your business or practice does not always translate into investing success. “Some of the mistakes I see some bright professionals make with respect to their wealth management are really embedded in behavioral finance, such as overconfidence and an aversion to losses,” she says. “Like any other investor, professionals may easily succumb to emotionally driven investing moves that are ultimately detrimental to their wealth. In addition, they often neglect factors that would help them maximize their financial position, such as tax loss harvesting and asset allocation strategies, without consideration to the other aspects of wealth management.”
Pareto says she’s a good listener who loves helping individuals and families identify and shape their life’s objectives through sound money management. She says the wealth management process is often like “building a complex puzzle, patiently and methodically finding the right components and pieces that lead to a cohesive and beautiful vision.”
For instance, Pareto helped one client who took early retirement at age 55 but wasn’t sure if she might go back to work someday. The client had a sizeable balance in her 401(k) account, and rather than roll over all those funds into an IRA, Pareto advised keeping some of the money in the 401(k) to cover her financial needs for the next few years. “You can make penalty-free (not tax-free) withdrawals from a 401(k) at age 55, but must wait until age 59 1/2 to make penalty-free withdrawals from an IRA,” Pareto says. “By moving some of those funds into two IRAs, we were able to increase the variety of investments available to her with lower fund fees.”
Summing up her advice, Pareto says, “Recognize what you know, and what you don’t know. Don’t be afraid to ask for help when you need it.”
Cathy Pareto, MBA, CFP® is founder and president, Pareto and Associates, Inc. in Coral Gables. She is a Certified Financial Planner ® with an MBA from Florida International University. Her firm was named in Forbes as one of the Top 10 Most Dependable™ Wealth Managers for Women in the U.S. as well as being selected to Worth Magazine’s list of America’s Top Wealth Managers for 2008.