In June, Mark Santero became president and CEO of RE Advisers and president, CEO, and director of
Homestead Funds. A veteran of Wall Street, he has spent most of his 35 years in investment and wealth-management leadership roles at Dreyfus, BNY Mellon, and Oppenheimer.
Santero spent his first months reviewing Homestead Funds' capabilities in investment, marketing, sales, and operations. As summer came to a close, he was getting ready to hit the road for face time with co-op directors and employees at NRECA's Regional Meetings.
Those opportunities for personal connections are a welcome change for Santero.
"Running a small investment company, you're one step removed from your shareholders. There are simply not that many layers between you and your customers," he says. "The only way to understand individuals' needs and their savings and investment concerns is to actually go out and listen to what people are experiencing in their lives and financial planning efforts, and then for us to help design the tools and resources to help them."
In an interview, Santero explains what led him to trade the skyscrapers of Wall Street for the vistas of rural Main Street, his take on "investing locally," and his goal to make personal investment more attainable for all.
Q. You've described Homestead Funds as a "refreshing" change from your three decades on Wall Street. What's different?
A. First, let me say that the whole cooperative structure is new and exciting for me. What brought me here is the opportunity to work with a nonprofit organization from an investment company standpoint. We are not only providers of investment capabilities. We're also our own clients. We work for the co-op members, to which we are part of. And if we're successful, it allows us to provide additional resources back to the cooperative community. That's the nonprofit approach. It's something that is unique in the industry and something I've never witnessed or worked with. There are trade associations, like TIAA-CREF, but they've got a huge external business as well. So it's refreshing to work with a business that gives back to its membership.
Q. You hear a lot these days about buying local. You have some ideas on how that philosophy applies to a mutual fund or, in this case, Homestead Funds.
A. The same people who manage your money or help you with your financial planning decisions for your Homestead Funds accounts work closely with NRECA and its members. The nature of that relationship—having colleagues who are also customers and being part of the cooperative family—motivates us to do the very best we can. Our ownership structure is also different. Profits earned by RE Advisers (REA), the investment adviser for the Homestead Funds, go back to NRECA. Having that as a potential source of revenue provides NRECA with budget flexibility, and it is in this way REA profits come back to the cooperative community. It's a really unique structure for an investment firm, but one that's consistent with the way co-ops are structured. In a publicly traded investment management company, shareholder interests might have to compete with stockholder interests. Here, our success supports the work NRECA strives to do with its members.
Q. What changes can Homestead investors look forward to in the coming months?
A. Our goal is to be a comprehensive investment services company to the cooperative community. We're going to be adding online tools for financial planning and asset allocation. We have licensed representatives and certified financial planners who provide those services today, but investors cannot access them directly. In the first quarter of 2019, our goal is to make it possible for more people to begin the process on their own online, as opposed to picking up the phone or filling out a form. Right now, the delivery is only through a representative.
Technology is an enabler. It doesn't deliver client service. It enables client service. And through technology, we're going to expand our client service capabilities to more and more individuals. We've been reluctant to shout from the mountaintop about our capabilities because staff would not be able to manage the volume. But we have those capabilities, and technology is going to enable us to provide them to more people on a consistent and repeatable basis.
And it's something that, be it through technology or partnerships with external vendors, we're able to deliver to our investors at no additional cost.
Q. What would you say to someone who wants to start investing but may be overwhelmed, either because it's intimidating or they think they need huge amounts of money?
A. Our mission at Homestead Funds is the same as NRECA's mission in servicing co-ops. It's about relationships, and it's about delivering the services electric cooperatives and their employees need. And we've identified that a lot of electric cooperative employees, especially those in rural areas, are underserved within the financial community. A lot of individuals don't hit the account minimums and the radar screens of the majority of financial services companies. Through a simple payroll deduction plan, no investment is too small. No balance is too small. We're here to support them and help them in their financial planning needs.
There are many events in an individual's life that you have to be cognizant of besides retirement. We all work, and we work longer and harder. What can we do in that journey to help provide financial confidence? That's where we can help. To do that for the NRECA membership, with thousands of employees, you have to be able to build capabilities and help people plan and save for life's events. Let's say you've got three kids, and you want to save for retirement, but you also want to buy a house or add an addition to your existing house. Or there's a wedding in the family, or you want to save for your child's college tuition. There are all these different things that come up in life's journey besides retirement.
A mutual fund is a component to a much more comprehensive plan—an investment and savings plan—that's unique to each individual. Investment products come and go. And people's investment goals change as they go through life. So to me, it's so important that we provide these resources, offer these services. And we've got to do a better job articulating to electric cooperatives and their employees how we can help them. And that's what's attractive to me, to help people realize their savings and investment needs.
It's important that in order to manage those needs and deliver those services, I have to be out there listening and asking questions and then working with the team of professionals here to deliver those services as best we can. And to do it in a way that's not complicated … that people can truly understand their statements, their financial plan, their road to whatever investment journey that they're on, whether it's for a house, college tuition, a wedding, a new car. That's what we have to do.
Investing in mutual funds involves risk, including the possible loss of principal. Past performance does not guarantee future results.
Investors should carefully consider fund objectives, risks, charges, and expenses before investing. The prospectus contains this and other information about the funds and should be read carefully before investing. To obtain a prospectus, call 1-800-258-3030 or visit homesteadfunds.com.
Homestead Funds' investment advisor and/or administrator, RE Advisers Corporation, and distributor, RE Investment Corporation, are indirect, wholly owned subsidiaries of NRECA.