Advisors in the News

InvestmentNews - Young adults in U.S. have more debt than they did last year at this time

In this week's article "Americans under 35 piling up debts" Andrew Coen cites a recent Qvisory study which reveals that 75% of those surveyed owe as much--or more--than they did last year; but as their financial situations worsen only 14% said they turn to a financial advisor for help. Many have gone without health insurance at some point and are carrying medical debt; most do not have a retirement plan. Carol Friedhoff of Savvy Outcomes in Dublin, Ohio notes that "financial advisors could play a huge role in helping young adults navigate these challenges, but very few seek out planners or can afford them." Jill Gianola of Gianola Financial Planning in Columbus, Ohio adds that "it's hard for young adults to figure out what their standard of living should be. They find themselves in a tougher cash-flow problem from the beginning." Both advisors sometimes give discounts for their services to young adults who are struggling to establish themselves economically. To read the article and learn more about the advice Friedhoff and Gianola offer, click on View to the right.

Investment Advisor - Upcoming ACA conference noted

This month's Investment Advisor calendar lists the Alliance of Cambridge Advisors Annual Conference which will be held October 17-21 at Loews Vanderbilt Hotel in Nashville, Tennessee.

Bankrate.com - Downsizing can be a smart move for retirees

Bankrate.com's Securing Retirement series turns its attention to trimming the fat from your retirement budget in Steve Santiago's article "Ways to downsize during retirement." He presents 6 tips for scaling back without feeling deprived, starting with "Shrink your domicile." Connie Stone of Stepping Stone Financial in Chagrin Falls, Ohio says, "Housing is the biggest area to save money." For some of her clients she suggests smaller homes with less upkeep; for others she recommends shopping for a retirement community with bundled services, such as meals and laundry. Stone tells of a client who recently moved from a condominium to a retirement community apartment: "She absolutely loves it because now she has a smaller home, and she has fixed costs for her meals." To read the other tips on downsizing, along with more of Stone's comments, click on the View link to the right.

Financial Advisor - CFP's revised ethics code takes effect

The Frontline News feature in this month's Financial Advisor notes that the Certified Financial Planner Board of Standards' revised Standards of Professional Conduct takes effect on July 1. For the more than 57,000 CFP certificants, this revision clarifies the fiduciary role of advisors and the responsibility they bear for acting in their clients' best interests. Avani Ramnani of Athena Wealth Advisors in Jersey City, New Jersey believes that these new standards bring the profession's practices into line with the public's ideas of what it should be doing: "There's a gap between what should be happening and what is happening," she notes. To read "CFP Board's New Conduct Standards" and access a link to the revised standards, click on View to the right.

InvestmentNews - Can fun and financial planning go hand-in-hand?

Definitely, says Kathleen Rehl of Rehl Financial Advisors in Land O'Lakes, Florida. Her article "Financial retreats focus on fun" in this week's InvestmentNews describes how Rehl asks clients to "escape into, not out of, financial planning" by inviting them to visit her in Florida: "I believe that there may be a different way to do financial planning, especially with clients who are far away. I can spend concentrated face-to-face time with my clients, as well as provide an opportunity for rest and recuperation." Among her retreat themes: Moving from Success to Significance, Planning for a Re-Fired Life, and Starting Life Over as a Widow. To read her entire article and learn how Rehl hosts these financial retreats, click on the View link to the right.

Cleveland's The Plain Dealer - Handling the tax implications of selling a home

In today's Ask the Expert column in The Plain Dealer reporter Teresa Dixon Murray refers a reader's question to Ken Robinson of Practical Financial Planning in Cleveland, Ohio. The reader and his wife just sold their home for $20,000 less than they paid for it two years ago and are asking if they can claim it as a capital loss. "A loss on the sale of a primary residence," answers Robinson, "is a non-deductible personal loss." But, he points out, the loss (or gain) isn't simply how much you got when you sold the house minus how much you paid for it. For tax purposes there are a number of adjustments that can affect this number. For example, you're allowed to subtract certain expenses of the sale from the selling price, and you're allowed to add the cost of certain improvements to what you paid for the home. Robinson's advice? Consult IRS Publication 523 Selling Your Home (available at irs.gov). Then "if you are at all unsure how to handle the sale of your home on your tax return, consult a qualified tax advisor."

Associate at Cambridge Cape Cod Advisors gains college planning credential

Congratulations to Philip L. Stockton, an advisor with Gregory Fenton at Cambridge Cape Cod Advisors in Cape Cod, Massachusetts. Today he was awarded the Certified College Planning Specialist credential through the National Institute of Certified College Planners (NICCP).

Cleveland's The Plain Dealer - How one advisor plans to spend her economic stimulus check

In today's Plain Dealer article "Most plan to spend tax rebates, surveys show" Cleveland reporter Teresa Dixon Murray takes a look at how some of the area residents who work in finance-related fields plan to spend their economic stimulus checks. Among their plans: paying bills and college tuition, saving, and special projects in and around their homes. Connie Stone of Stepping Stone Financial in Chagrin Falls, Ohio and her husband will put half of their tax rebate check into their cash reserve fund and will use the other half for trees, shrubs, and perennials . Stone--who is a master gardener--says, "My husband and I are fanatical about landscaping and gardening." They bought a 104-year-old house ten years ago and have been gradually working on the landscaping since then. These purchases, she says, "will provide a return for the next 20 or so years."

InvestmentNews - Advisors can focus on what makes clients smile

"Meeting with clients right now might not be much fun," says Kathleen Rehl of Rehl Financial Advisors in Land O'Lakes, Florida. With the turmoil on Wall Street providing more than enough pessimism to go around, it's a good time to turn to something less bleak, and the title of her article in this week's InvestmentNews says it all: "Refocus clients to big-grin goals." And what, exactly, is a "big-grin" goal? For each of us, says Rehl, it's the answer to the question, "What would give you lots of joy and put a huge smile on your face this year?" Some of the goals her clients' answers have identified are traveling, redecorating, celebrating a family event, improving their health, and getting organized. "Presuming that the goal is affordable," says Rehl, "the advisor's job is giving a green light to spend." To read the entire article, click on the View link to the right.

InvestmentNews - April 15 tax deadline poses a tough problem for a number of investors this year

According to Lipper, Inc. of New York, for 2007 mutual fund investors will owe a record-breaking $33.8 billion in taxes on capital gains distributions. In this week's InvestmentNews article "Deadline on taxes a greater menace for many advisers" Brooke Southall describes the situation some investors find themselves in: 2007 will mark the first year of capital gains since 2000 when the technology bubble burst, and falling home values and a declining stock market are making it difficult for these investors to raise the money to pay the capital gains taxes they owe. Advisors meeting with their clients to sort through these problems are filing a record number of extensions; these may buy time, but they are no panacea, says Avani Ramnani of Athena Wealth Advisors in Jersey City, New Jersey. "Extensions only enable you to gather any missing information. This is not an extension to pay your taxes," she cautions. "If someone extends their deadline and does not pay what was originally due to the Internal Revenue Service, they get levied with interest and penalties. That may not be worth delaying the payments." To read the article, click on the View link to the right.

Wealth Manager - Donna Skeels Cygan honored

Congratulations to Donna Skeels Cygan of Essential Financial Planning in Albuquerque, New Mexico for being named in this month’s issue of Wealth Manager as one of "The Top 50 Women in Wealth Management." Of this honor, the editorial staff of the magazine says, "This is not merely a list of who has the most assets under management or who has the highest production numbers. Some, for example, are on this list because of less-tangible contributions they've made to women in the profession, such as serving on committees or mentoring. However, they all have at least one thing in common: they are role models for the next generation of women advisors."

Financial Advisor - Moving the financial planning industry toward professional status

This month's Financial Advisor article "Why Aren't We There Yet?" by David Drucker uses the opening of the College for Financial Planning in 1972 as the inception date of the financial planning industry. Why then after nearly 40 years has the industry not achieved professional recognition, he asks. Bert Whitehead of Cambridge Connection in Franklin, Michigan weighs in: "The first thing we have to do," he notes, "is get rid of our sales mentality. Many people who come into financial planning are just looking for that seven-figure W-2 they get from making a big annuity sale." Jenna Hung of LifeStream Financial in Santa Clara, California adds that the public needs to see financial advisors as true fiduciaries. "Their perception of financial advisors as members of a true profession would also be advanced," she says, "by more quality control, in the form of some kind of peer review process, the establishment of career paths for the next generation of advisors, and a mentoring system..." To read the article, click on the View link to the right.

Newsweek - Many baby boomers can't afford to retire

For many leading-edge baby boomers who are nearing retirement age, the title of Daniel McGinn's and Temma Ehrenfeld's article in this week's Newsweek says it all: "Retirement Postponed." The housing bust, the weakening economy, and the volatile stock market have all taken their toll on the retirement plans of many Americans who had planned to sell their homes and downsize to a condo, pursue a second career or part-time work, and/or rely on their 401(k)s for retirement income. Essentially, many baby boomers who thought they would be quitting work by now have discovered that they simply can't afford it. "There's a lot of sheer panic out there," says Bert Whitehead of Cambridge Connection in Franklin, Michigan.

The Boston Globe - Dana Levit fields finance questions in live Q & A session

Dana Levit of Paragon Financial Planning in Newton, Massachusetts took personal finance questions from readers in today's online Money Makeover chat sponsored by The Boston Globe. One concern common to a number of the callers was debt: "Trouble," for example, has $54,000 in credit card debt, is committed to becoming debt-free, and is looking for a good debt consolidation place. Levit's response? "My favorite organization is a non-profit consumer credit counseling service that is part of the National Foundation for Credit Counseling. Their name is CCCS Credit Advisor, and their number is 800-208-2227. ... The first step is to talk to a counselor at CCCS, and they'll be able to tell you more about your options. Keep up the good work!" To read a transcript of the entire broadcast, click on the View link to the right.

Wall Street Journal - Some things to consider about retirement-contribution protection insurance

Retirement-contribution protection insurance, designed to continue funding the retirement of an individual who has become disabled, is attracting interest among financial advisors. In today’s Wall Street Journal article "Securing a Nest Egg" Karen Hube describes how these policies can be used to supplement standard disability coverage, which usually replaces enough income to cover a family's day-to-day needs but not enough to continue funding retirement accounts. This could be especially important for those with high incomes, since disability insurers have caps on how much they will pay out each month. While someone earning $30,000 a year might be able to replace 75% of his income, someone earning a much larger salary might be able to replace only 40%. Additionally, those who earn part of their income as "extras" could come up short when it comes to disability coverage. "Policies often are tied to base salaries and don't factor in bonuses, stock options, and commissions," says Barry Kaplan of Cambridge Southern Financial Advisors in Atlanta. Another important issue when considering this type of coverage is tax liability. If you are able to get group coverage through your employer, contributions will continue to be made into the retirement plan. But if you get an individual policy, an irrevocable trust will be set up in your name if you become disabled. And with the trust, any distributions are subject to taxes which are paid annually out of the trust's assets, even though the distributions are reinvested in the trust. "To keep taxes to a minimum, you can choose tax-efficient investments within the trust," says Kaplan, adding that "you may defer taxes by investing in an annuity within the trust."

CNNMoney.com - This baby boomer needs to organize her finances to meet her retirement goals

Baby boomer Linda loves to travel, spends about $6,000 a year indulging her passion, and would like to continue to do so without giving up her financial security. But for this to happen, she needs to make some big decisions now. In today's CNNMoney.com article "A retirement plan for the jet-setter" Amanda Gengler describes Linda's situation: Her broker, who had been managing her portfolio since her divorce five years ago, changed firms and suggested that she move her assets to a new account which would charge 2% in annual expenses. Since she was concerned about the fees, Linda moved her money to Vanguard, but--since she's not sure how to invest it--it sits in a money market fund earning 4.5%. The good news? The move kept her from suffering losses in the recent stock market decline. The bad news? Linda knows that if she wants to see the world, she can't keep her money in cash. Fortunately, Linda's financial situation is strong: She earns over $100,000 a year; she has $627,000 saved for retirement and another $315,000 in taxable accounts; in four years she will start receiving almost $3,800 a month from her former husband's pension. But, Linda asks herself, "What should I do?" Enter Penny Marchand of Cambridge Financial Group in Tucson, Arizona with some suggestions. First, she says, since Linda plans to work only four more years "she needs to protect some assets and should therefore put about half of her retirement funds into bonds and cash to help reduce risk." The other half of her retirement portfolio should be invested in a diversified mix of equities. As for her taxable account, Linda owns several actively managed accounts that generate capital gains. "Such funds belong in a tax-deferred account," says Marchand. "She should dump them and invest the money instead in index mutual funds and ETFs, which are naturally tax-efficient, as they rarely sell stocks." During the early years of her retirement, Marchand suggests that Linda rely on her brokerage account for funding, keeping her retirement assets sheltered from taxes as long as possible and that she begin putting $500 more a month in savings, allowing her to live off her taxable money until she is 62--the age at which she can start collecting Social Security. "This might take a little sacrifice, but the end result will be her ticket to ride in retirement."

Kiplinger's Retirement Report - Retirees and near-retirees need to protect their nest eggs in this volatile market

In this month's Kiplinger's Retirement Report article "The Thrills, the Chills of the Volatile Market" Rachel L. Sheedy and Kathryn A Walson recommend strategies for those who are about to tap into their portfolios for retirement income. Even though the stock market's recent roller coaster ride has been "heart-stopping" at times, their first piece of advice is not to panic and abandon the stock market by selling holdings at a market low. Instead, take a hard look at your spending, your cash flow, and your asset allocation, which may have been thrown out of whack by recent market swings. Weighing in on this point is Troy Von Haefen of Von Haefen Financial Management in Nashville, Tennessee who--along with other advisors--warns investors not to get too focused on which groups of stocks--foreign or domestic, large-cap or small-cap--to buy or sell. "This is more about creating balance and not trying to cherry-pick short-term investment strategies," he says. As for adding enough fixed-income investments as ballast, Von Haefen adds, "I would want to see at least some downside protection through Treasuries."

Financial Planning - Consider what your workspace says about your practice

In this month's Financial Planning article "The Ideal Office" Bob Veres looks at some variations on the "traditional" financial planning office. One growing trend among planners is working from home. Kathleen Rehl of Rehl Financial Advisors in Land O'Lakes, Florida is part of this trend, but her home office is a bit different from the usual converted bedroom or space above the garage. When she built her Florida residence, she integrated the office into the design: "I now have a house in my office, rather than an office in my house," she says. "I guess you could say," says Rehl, "that my clients are treated as guests in my home." To read how she makes this arrangement work, click on the View link to the right.

InvestmentNews - Especially for young workers, participating in employers' retirement plans is a must

In this week's InvestmentNews article "Young workers miss out on matches" Andrew Coen cites one of the findings of the recent Employee Benefit Research Institute study on retirement trends: 71% of full-time workers between the ages of 21 and 24 weren't enrolled in their employers' retirement plans in 2006. Even though these young workers often find themselves living from paycheck to paycheck--some with additional expenses incurred after college--not participating in a company's retirement plan is a huge missed opportunity, especially if there is a company match. Jill Gianola of Gianola Financial Planning in Columbus, Ohio encourages young workers to take advantage of a company match program as "a good first step in overall financial planning" and helps them set up budgets that include all expenses and pave the way for participation in the retirement plan. "If they can get a match or any kind of free money, you don't want to leave that on the table," she says, adding that "it's never too early to start." To read the article, click on the View link to the right.

Wall Street Journal - Global credit crunch hits auction-rate securities

In today's Wall Street Journal article "Some Investors Forced to Hold 'Auction' Bonds" Jane J. Kim and Shefali Anand describe the situation Naveen Ahuja finds himself in: He was recently planning to sell $665,000 in auction-rate securities when his broker told him that he wouldn't be able to sell because of "liquidity problems." This formerly sedate portion of the credit markets has been hit hard by the global credit crunch; these securities carry floating rates that are reset in auctions (typically every week or so), but recently much of this debt (sold to finance "everything from hospital expansions to student loans") has failed to generate enough bidders, leaving those wishing to sell locked into these now-illiquid investment vehicles. Ahuja now finds himself getting more apprehensive about auction-rate securities issued by municipalities. Encouraged by his financial advisor Bert Whitehead of Cambridge Connection in Franklin, Michigan, "Mr. Ahuja had planned to liquidate his auction securities this week and move the money into Treasurys. On Tuesday, however, when he tried to sell about $425,000 of the securities, the auction failed. He plans to try again today and says he will keep trying until an auction is successful."

Poker Pro - What your poker game decisions and your investment decisions might have in common

Here's an interesting question: Are there similarities between the way we make decisions in deciding what to do with our investment portfolios and deciding what to do in a poker game? The answer is "yes" according this month's Poker Pro article "How Your Emotions Affect Your Finances--and Your Poker" by Barbara Connors who interviewed Rob Reed of Reed Financial Planning in Columbus, Ohio for the article. Reed, an expert in behavioral finance--which examines the psychology behind the financial choices we make--explains: "Researchers are putting together economics and psychology, looking at how real people make economic decisions,...specifically in how people make mistakes. It's about our emotional inclinations." And what are some of the "emotional" tendencies that can lead us astray in terms of our personal finances as well as our poker playing? Loss aversion is one, says Reed, pointing out that it's not an "emotionally neutral" issue; the pain of losing $1,000, for example, hurts two-and-a-half times more than the pleasure of gaining $1,000 according to researchers. Another is the tendency to think that there are "different kinds of money," says Reed; this leads people to be conservative with earned income but to treat a tax refund, for example, as "money they found on the street" which, he says, begs the question "why would your spend the money you found on the street differently than you would earned income. Money is money." Still another pitfall of following our emotions is the tendency to over-estimate our own skill, leading people to attribute their successes to skill and to dismiss their losses as the result of bad luck; "It's loss-aversion again," says Reed, "If it's bad luck, well I have no control over luck. If I win, then that's a shining example of my incredible insight." Whether you are at the kitchen table with your portfolio or at the poker table with your chips, Reed emphasizes that emotions must be kept in check: "Studs Terkel once said that he could never be a good poker player, because every good poker player he knows has the soul of an accountant."

Wall Street Journal - Making the best use of your economic stimulus rebate check

The federal economic-stimulus package that could put rebate checks in the hands of those who qualify as early as May has many asking, "How can I make the best use of this money?" Today's Wall Street Journal article "Advisors Counsel Caution Amid Rebate Talk" by Kristen McNamara focuses on the role financial advisors can play in helping clients answer this question. Although the proposed amounts--$300 to $1200 (or possibly more if you have children)--aren't enough to significantly impact most financial plans, this still creates an opportunity for planners to touch base with their clients. One advisor who plans to do this is Troy Von Haefen of Von Haefen Financial Management in Nashville, Tennessee who says that he "will likely email clients if legislation is approved and emphasize that rebates are 'a great opportunity' to accelerate financial plans."

Columbus Dispatch - Federal Reserve's rate cuts stimulate mortgage refinancing

Consumer interest in refinancing mortgages got a real boost this past week after the Federal Reserve cut the short-term fed-funds rate by three-quarters of a percentage point. In today's Columbus Dispatch article "Homeowners scurrying to refinance" Tracy Turner describes how these lower rates have led to a "refinancing boom." According to the Freddie Mac weekly survey the average rate on a 30-year fixed-rate mortgage fell to 5.48 percent the day before this article was published, down from 5.69 percent the week before (leading to a rise of 8.3 percent in mortgage applications nationwide during this same week, according to the Mortgage Bankers Association), and Ohio has been no exception. The state's Fifth Third Bank has employees working overtime and is considering adding staff to handle the increase in applications. While--according to Bankrate.com--there is not a direct connection between 30-year fixed-rate mortgages and the overnight fed-funds rate, many consumers don't know that. "Regardless," says Jill Gianola of Gianola Financial Planning in Columbus, Ohio, "rates are lower and, for some homeowners, it may make sense to refinance a fixed-rate mortgage or go from an adjustable to a fixed." Joe Baumann of Cambridge Financial & Tax Advisors in Ghanna agrees: “I would recommend, assuming good credit, that consumers refinance their adjustable-rate mortgage into a 30-year fixed-rate mortgage to lock in the low-by-historical-standards rate of 5.5 percent and remove the uncertainty of their future mortgage payments.”

Christian Science Monitor - A look at the pros and cons of target-date funds

In today's Christian Science Monitor, Steve Dinnan's Financial Q&A feature--"Is a target-date fund right for you?--addresses the concerns of a reader who asks, "What do you think about 401(k) target retirement funds? I'm 24 years old and invest in a 2050 fund." According to Jeff Broadhurst of Broadhurst Financial Advisors in Lansdale, Pennsylvania, target-date funds—whose diversified asset allocations adjust automatically as you near retirement—are a good choice for certain types of investors. Novices, he says, can benefit since they "haven't yet learned how to construct a risk-appropriate, globally diversified, tax-efficient portfolio of low-cost funds." Also, the not-so-wealthy can use these funds to properly diversify across asset classes; for them, if the minimum initial investment for a single fund is $3,000, that same amount invested in a target-date fund "will be spread over a variety of underlying funds and thus will be well diversified." And passive investors, whom he describes as "those not inclined to fuss a lot with their investments," can use target-date funds to "set it and forget it." However, cautions Broadhurst, there are downsides. First, these funds can be too conservative. He recently looked at a 2050 target-date fund with a 10 percent bond allocation; he doesn't think that someone with 42 years to retirement needs any bonds at the moment. Also, since target-date funds are "funds of funds," Broadhurst warns that "their expense structure can be higher than that of a standard mutual fund."

AdvisorMax.com - Helping baby boomer clients prepare for retirement

With life expectancies increasing, healthcare costs rising, and guaranteed pensions fading, smart retirement planning has become more important than ever. In today's AdvisorMax.com article "Teach Your Clients to Retire Wisely" Vanessa Richardson enlists the help of experts and asks for their "teaching tips." Among them, Kathleen Rehl of Rehl Financial Advisors in Land O’Lakes, Florida, whose techniques include a questionnaire to help clients identify important retirement issues such as family health history, income sources, expenses, possible moves, travel plans, and charitable legacies. She also uses visual aids to help clients grasp their financial situation in retirement: One of her favorites is the illustration "After the Last Paycheck: Making Your Money Last in Retirement." This "Chutes and Ladders" graph--which she uses annually from the time clients are several years from retirement to their early retirement years--shows clients the various sources of income and how they can shift and change. "When people look at this," says Rehl, "they immediately get it instead of trying to mentally figure out how much they need. After we talk through the concepts on the page, then we can plug in the specific numbers. It gives them more peace of mind." To address retirement's important non-financial issues, she uses an exercise for couples called "One Ideal Day in Retirement" and notes that some couples are surprised at how different their choices are. "That's when we sit down and discuss how to mix retirement lifestyles," says Rehl. "It sometimes creates a whole new marriage, but also creates new opportunities."

Financial Advisor - Reverse mortgage market not affected by recent housing downturn

The recent housing downturn has certainly not blindsided the reverse mortgage market. One reason--as pointed out in Gail Liberman's article "A New Focus On Reverse Mortgages" in this month's Financial Advisor--is that many of the 78 million baby boomers nearing retirement are doing so without adequate savings and see reverse mortgages as "the one thing that might bail them out." So what are some considerations if a client comes to you and asks about a reverse mortgage? Staying with an established "FHA approved" lender is important, as is consulting with an elder law attorney to learn the possible impact of a reverse mortgage on Medicaid planning and estate planning. And it is equally important to carefully examine costs; reverse mortgages can have a 2% insurance fee, a 2% origination cost, and a $2,000-$3,000 third-party closing cost. In the end, says Christopher Zehnder of Zehnder Wealth Management in St. Cloud, Florida, "a home equity credit line may prove cheaper." To read the article, click on the View link to the right.