Financial Planning

IRS ISSUES GUIDANCE FOR AUTOMATIC ROLLOVERS: The Internal Revenue Service has issued Notice 2005-5 providing guidance on the new automatic (or default) rollover rules for qualified retirement plans.

In his State of the Union address this week, President Bush pushed his plan to overhaul Social Security and add optional private accounts for younger workers, as the White House unveiled some new details of how that plan would work.

American Express Co. said that it will spin-off its American Express Financial Advisors unit to shareholders to focus on its credit cards, charge cards and travel services businesses.

Most chief executives of America's fastest-growing private companies say that they're likely to step down within the next 10 years, but almost half have put little to no thought into succession planning, according to a survey by PricewaterhouseCoopers.

Life gets complicated for entrepreneurs who become franchisors, and many fail for lack of planning. They must exercise special care in forecasting revenues, which can take time to appear, much less mature. They must have a robust back-office infrastructure in place early on, with or without the revenue to support it. They must present audited financials to franchisees and follow detailed procedures in reporting to investors, if any.

There is an above-the-line deduction available for many individual taxpayers for qualified tuition and related expenses. The deductible expenses are defined in the same manner as they are for the purposes of the Hope Scholarship Credit and the Lifetime Learning Credit.

MOST TAX PROFESSIONALS ENTER PFP ARENA VIA BROKER/DEALER: The majority of tax professionals who enter the financial planning business do so by hooking up with an independent broker/dealer firm, according to a report by market research and consulting firm Tiburon Strategic Advisors.

Like a good grape harvest, 2004 was a vintage year for Certified Financial Planners, as the median earnings for CFPs across the country rose 56 percent, to $219,000, according to a survey conducted by the College of Financial Planning.Meanwhile, 54 percent of CFPs reported that their annual income is derived via a combination of fees and commissions, while 29 percent reported that their income was a result of fee-only planning services.The results were part of the College for Financial Planning's "2004 Survey of Trends in Financial Planning." The poll is conducted among holders of the CFP designation who also are members of the Financial Planning Association.But with added income also comes extra work: The majority of survey respondents reported that they drafted an average of 30 financial plans over the past year, compared to an average of 21 financial plans in 2003.

Many of the country's wealthiest individuals have not taken basic steps to protect their assets or mapped out an estate plan, according to a recent survey by wealth management firm PNC Advisors. The poll, which surveyed 792 affluent Americans, including 500 high-net-worth individuals found that 37 percent of those queried with $10 million or more in investable assets do not have a will, health care proxy or trust, and have not named a trustee or administrator for their estate. The PNC poll gauged attitudes about wealth among high-net-worth individuals, including concerns that their children will grow up spoiled, pressure to meet philanthropic obligations, anxiety over appropriate care for older parents, and uncertainty about future financial security. Fewer than half (46 percent) of respondents said that they have become happier as they have accumulated more money. Nearly one third (29 percent) of those respondents with more than $10 million in investable assets agreed that having a lot of money brings more problems than it solves, and 33 percent agreed that having enough money is a constant worry in their life. Half (49 percent) of those polled who have children at home worried that their kids will grow up feeling "entitled," and 44 percent believed that their children are spoiled. Just under one third -- 29 percent -- of respondents encouraged their children to take after-school jobs.

As part of its efforts to promote the Personal Financial Specialist designation, the American Institute of CPAs at its 2005 Personal Financial Planning Conference this week announced a new online financial planning resource targeted at CPA/financial planners and consumers seeking financial planning guidance.