Financial Adviser’s Methods Pay Dividends (From the Oakland Tribune)

By Alec Rosenberg - STAFF WRITER

Sunday, March 24, 2002

OAKLAND - In 1987, Steven Pontes’ career hit a fork in the road. He was working at a pension firm in Oakland and planned to become a partner, but he left over a difference in philosophy to start his own financial planning firm.

“They were commission driven,” Pontes said. “I feel like we earn our money when we produce results for our clients. We’re not commission driven. It’s a completely different way to set up an organization.”

While the pension firm went bankrupt, Pontes Financial Group of Oakland has been producing results for clients for 15 years, even through the past two years of down markets. In 2001, his clients had returns of 10 to 15 percent. In 2000, his clients received a return of 2 to 3 percent.

“Our clients were happy with 2 percent to 3 percent that year,” said Pontes, whose firm manages a $150 million portfolio.

Pontes, 48, an Oakland native raised in San Leandro, has found happiness as the leader of a financial group, a landlord and father of an adopted daughter. He has blazed an unconventional path to get there.

After dropping out of high school, he worked at Winnebago Industries motor homes in Iowa, served three years in the U.S. Army and started a landscaping company. He entered the real estate business in 1982, working for a real estate brokerage in downtown Oakland before joining the pension firm and then starting his financial group.

“I failed algebra, but I have an aptitude for numbers. I calculate stuff in my head,” Pontes said. “I like being able as a firm to assist people in realizing their dreams and visions, combined with the challenge of the marketplace.”

Pontes is quick to credit executive Brad Sasser and his firm’s 10 employees. The firm works to define investors’ objectives and then meet them with a strategy of unusually low-risk investments with high returns, he said.

“The staff loves working with this type of business,” Pontes said. “Clients love us. It makes it fun to do what we do.”

One strategy Pontes uses is value investing. For example, Pontes’ firm invested in Rite Aid bonds last year after they fell to $25 from $100 following negative press. Pontes’ firm, which analyzed Rite Aid and saw it as a low risk, sold the bonds six months later at $93 for a healthy return.

Also, the firm makes “special situation, real estate-backed” loans to businesses in need that may have bad credit or be in bankruptcy. Several years ago, Pontes made a loan to Chiodo Candy when the company couldn’t get one elsewhere, Louis Chiodo said.

“I think he runs a great ship,” said Chiodo, who has since sold his business and has become an investor with Pontes Financial Group. “I would recommend him to just about anybody I know.”

Pontes Financial Group currently has 35 real estate-backed loans totaling $30 million.

“A bank can’t do these loans,” Pontes said. “I’m not worried about things banks are worried about. I’m worried about value.”

Competition includes firms such as Owens Financial Group in Walnut Creek, but Pontes considers them co-market participants.

“There’s enough for all of us,” Pontes said.

The loans carry an interest rate of 10 to 14 percent. Companies have an incentive to pay them off. With a maximum loan-to-value ratio of 65 percent, the loan amount does not exceed 65 percent of the property’s appraised value.

“Companies don’t want us to foreclose,” Pontes said. “They’ll do whatever they have to do to pay us off.”

Pontes said his firm has lost money on only one real-estate backed loan in 15 years and not had one delinquency in two years.

“Our marching orders are we cannot lose money,” Pontes said. “In the height of the tech boom, we had clients fire us for 30 percent returns. They were saying, `Why isn’t it 50 percent, 70 percent, 100 percent?’ We’re not interested in year-to-year. We’re interested in long-term results.”

Pontes still has most of his clients from his real estate brokerage days in 1982. He has a total of 60 clients and his firm has another 250 investors.

Pontes’ office is adorned with artwork from his daughter, Miya, now 6.

“I can’t think of anything I would rather do more (than be a father),” he said.

Pontes also keeps busy as a landlord. He owns the seven-story downtown Oakland building at 414 13th St. that houses his financial group. He spent $380,000 to voluntarily retrofit the building and is working on a $200,000 facade improvement project.

“We’re very happy,” said tenant Janis Brewer of the National Brain Tumor Foundation. “I think he cares a lot about this building and about Oakland.”

Pontes praised Oakland’s diversity and richness of culture.

“I think property owners owe it to their community to have their building be presentable,” he said. “It’s not all about revenue.”

Pontes also owns an apartment building in Oakland, a commercial property in Berkeley and property in Portland. One tenant moved in when she was 87 years old.

“She’s 102 now, still going strong, does all of her own shopping,” Pontes said. “She’s remarkable.”

Pontes works out daily, running and lifting weights.

“That’s how I keep myself sane,” he said.

Pontes, who plans to enter academia to teach a course in business, philosophy and ethics, said he will consider his company a success when he knows his clients, staff and family are taken care of.

Is his company there now?

“Yes,” Pontes said.

Alec Rosenberg can be reached at (510) 208-6445 or arosenberg@angnewspapers.com

Thursday, August 28, 2008

All Rights Reserved 2008