Financial Planning

The government is frustrated over seniors' difficulties with the expanded Medicare menu. Evidently, having so many choices has led to confusion, rather than informed decisions.Maybe they should seek advice from corporate executives, who face a similar dilemma deciphering their compensation alternatives. While highly paid employees may appear to suffer from nothing worse than an abundance of riches, many are wasting money through inaction or ill-advised choices. The effects of these decisions on their retirement plans can be significant. It's an opportunity for wealth advisors to serve a unique market niche.

SEC ADOPTS FRAUD MEASUREThe Securities and Exchange Commission voted to adopt a sweeping anti-fraud rule that targets money managers who deliberately mislead investors.

Microsoft has launched Microsoft Money Plus, an update to its personal financial software targeted at consumers, entrepreneurs and small businesses.

The future of the accounting profession will be largely determined by its response to escalating talent shortages and other challenges of the post-regulatory-reform era, says a distinguished group of leaders in this field. The Robert Half International Financial Leadership Council recently met and recommended a number of strategies for addressing these issues. It’s all set forth in a new report, Charting the Future of Accounting, Finance and Audit Professions. The Council, which represents a diverse range of leaders from the corporate world, public accounting firms, industry associations, and top accounting universities in the U.S. and Canada, discussed the impact of changing workforce demographics on today’s accounting landscape and the recruitment and retention challenges associated with these shifts. Some of the key findings and recommended solutions are:

Albridge Solutions has added mutual fund and exchange-traded fund research to its Albridge Wealth Reporting software.

I attended a breakfast meeting the other day with executives from The Money Management Institute, which is a national organization for the managed account solutions industry. The Institute represents portfolio manager firms and sponsors of investment consulting programs, and the leading advocate for the industry on regulatory and legislative issues. Its membership list reads like a Who’s Who of firms that offer financial consulting services to individual investors as well as related professional portfolio management companies, among others. Present at the meeting were Christopher Davis, its President, Kevin Hunt, Chairman of the Board of governors and Executive Vice President of Old Mutual U.S. Holdings, Len Reinhart, President of Lockwood, an affiliate of Pershing, and Mary Deatherage, Senior Vice President, Wealth Management, at Smith Barney. It was a fascinating group who discussed various aspects of financial planning for clients including certain case studies and how they were dealt with. I learned that as recently as five years ago, financial planning for clients was pretty much handled by wirehouses for the planning and CPAs for the taxes. That has now changed dramatically, they say. Because of the advent of the Baby Boomers and their needs toward retirement, and the fact that people are retiring at an earlier age (57) than ever before, not to mention the broker/dealer and SEC business going on, CPAs are now replacing wirehouses in dealing with financial planning and investments. In fact, it was mentioned that insurance agents as financial advisors have slid downward somewhat because people simply don’t want to get involved with advisors who take commissions. It looks like it’s a question of trust, and many CPAs who have substantial financial planning practices tell me that clients are rather edgy whenever the CPA raises the specter of an insurance policy or certain investments that appear to have commission-strings attached. So, the CPA who is doing fee-based or fee-only planning is rising rather rapidly, especially fee-only. It is also interesting to note that the managed account solutions market grew at a healthy 6.7 percent to reach $1.34 trillion in assets just in the first quarter of this year alone. According to figures furnished, it outpaced the S&P 500 index, which returned only .64 percent during the same quarter. What also came out of this meeting is the fact that those who use financial planners are more loyal to their advisor than individuals who use full-service brokers or investment advisors and that client loyalty is built on responsiveness and investment returns. According to the Spectrem Group in its Affluent Market Insights for 2007, once advisors have turned a prospect into a client, they must retain that client. “As important as investment returns, low fees and low expenses are, they are not the primary driver of loyalty among the affluent. Simply returning phone calls promptly is the best method for advisors to develop loyalty. It is also important to investors that advisors provide a contact if he or she is not available.” In addition, Spectrem says that “giving “gifts at holidays, remembering birthdays and providing free tickets to special events does not develop loyalty.” Hmmm. How about a box of imported, dark chocolate? Does the trick for me.

Large companies in the United States are getting better at managing potentially critical business risks, according to a new study.

Although there are reams of literature and generally accepted guidelines stating that people typically spend 75 percent to 80 percent of their pre-retirement income during retirement, some advisors have found that's not necessarily the case.In fact, some say the spending levels are about the same.

By now, your clients should have heard the term "REIT," or real estate investment trust, in the investment world, but they may be wondering what one is and how it works.First, they should know that REITs are not new. They've been around for more than 45 years. However, it has only been since the 1990s that REITs have gained popularity.

IRS RULES ON PARTIAL TERMINATIONThe Internal Revenue Service ruled that a partial termination of a qualified plan occurred where 23 percent of a plan's participants were no longer active due to the closing of one of the employer's four locations. Therefore, all plan participants were fully vested.