Accounting education

Genworth Financial Investment Services has launched a new section of its Web site dedicated to practice management.

As an accountant, you observe your clients’ business successes and failures every day. However, many accounting firms struggle in their efforts to deliver financial planning services profitably.Why?

H.D. VEST TURNS 25Broker/dealer H.D. Vest, which pioneered the strategy of using CPAs and tax professionals as financial planners, is celebrating its 25th anniversary. Since its founding in April 1983, 47 states now allow CPAs to accept commissions for advising their clients and implementing investment planning strategies and products. Currently, H.D. Vest has some 5,400 independent advisors.

The House Ways and Means Subcommittee on Select Revenue Measures held a hearing to discuss tax incentives for post-secondary education.

The American Institute of CPAs found a range of responses when it surveyed Americans on how they intend to use their tax rebates.

Accounting software developer Intacct has raised $15 million in financing led by Bessemer Venture Partners.

Financial planning and advisory services have helped fuel an increase in revenues at CPA firms, according to a new study by the American Institute of CPAs and Moss Adams.

Apparently, women are not as prepared for retirement as are men. At least, that seems to be what is coming out of recent pronouncements and surveys. This includes the U.S. Department of Labor’s Women’s Bureau, the AARP, and a new study released from Bloomington, Illinois-based Country Financial. It all points to a gender gap on the subject of saving for retirement. The Country Financial survey, which had some 3,000 respondents nationwide, found that men’s biggest fear about retirement was not having the resources to do what they would like to do while women were closely split between the same concerns and also worrying that they will run out of money. Men, on the other hand, said they were much more likely to have taken adequate steps to alleviate this particular fear. According to Keith Brannan, vice president of financial security for Country Financial, women have to consider that they may have earned less than men and could live some seven to 12 years longer than their husbands. “It takes a lot of planning and prioritizing. If people don’t accept that burden, they won’t feel financially secure for retirement.” One financial advisor told me that he has seen this same concern among his clients where women look to be more troubled about retirement and men are just the opposite, even expressing overconfidence. According to the Labor Department, of the 59 million women currently earning a salary nationwide, only 47 percent have a retirement plan and nearly half of all women working do not have a 401(k). In fact, it is reported that a retired woman’s median income in 2004 was $12,080 compared to $21,102 for men. Another reason for concern. The AARP says that on average, a woman’s monthly Social Security check is around $800+ compared to more than $1,100 for men. So, is it any wonder that women have this concern? Of course, most people do acknowledge a need for early savings toward retirement but in actuality, they don’t do so. Only 42 percent of men and 35 percent of women actually began putting money aside by the time they reached age 30. Brannan says that given all the negative news about the economy, he doesn’t find it surprising that people have become more pessimistic about retirement. “However, the growing disconnect between how men and woman feel emphasizes the crucial need for families to talk about money matters. With proper planning, a secure retirement is achievable for almost anyone, no matter their gender.” For more information on this entire subject, take a look at www.countryfinancialsecurityindex.com.

With tax season now behind us, accountants can turn their attention to the clients who are on extension and provide advice to other clients to help them save money in the year ahead.

KPMG has established an IFRS Institute to address the needs of companies, investors and academics affected by the transition to International Financial Reporting Standards.

People are cutting back on their spending to save money as the U.S. economy slows, according to a survey by Harris Interactive for the American Institute of CPAs.

From what I can glean, there is definitely a retirement crisis beginning to bubble in this country. Or is that an understatement? How so? Well, it seems to be affecting some 50 million retirees because according to MotleyFool.com, more than 39 percent of investors who are presently in or near retirement have saved less than $25,000 for their golden years. Yes, you read that right, $25,000. Astonishing, eh? Clearly, this is the lowest American savings rate since the Great Depression. Jon Hagan Hicks, who is the chief investment officer for J. Hagan/Warren Wealth Advisors based in Louisville, Ky., says that retirees are behind the eight-ball for saving enough for retirement. “We expect interest rates to remain low and the stock market to be very volatile for 2008. This is a very bad combination for retirees to earn a reasonable rate of return in traditional investments.” Hicks has a reputation as being quite astute when it comes to this subject and his words are well respected in the industry. He specializes in alternative investments, financial management theory, and asset management. As president of J. Hagan Wealth Advisors, Hicks has created and managed traditional investments, real estate portfolios, hedge funds, and mortgage-backed securities. He says that although younger investors may have enough time to weather the storm in the equity markets, he expresses concern about retirees. A lot, he notes, have lost principal recently and he sees many savings in low-yielding accounts. “If food, energy, and healthcare costs keep increasing at their recent rates, many retirees’ portfolios may expire before they do.” As to a solution, Hicks maintains that a retiree must seek out expert advice to avoid as much volatility as possible in their portfolios while still looking to maintain a healthy income stream. But he does throw up a red flag. He says the biggest problem is that many retirees are trying to manage their finances on their own without expert help. In fact, it is noted that nine out of 10 investors don’t even have a financial plan. Basically, not only have people not saved enough but they don’t even know where they are going. I can attest to this when I look at many of my friends, again most of whom do not have any specific plan and they are all at retirement age. Hicks doesn’t prop up any specific vehicle. He is too honest for that. When he is asked about specific investments, he simply advises that every individual investor has different objectives and needs and that no specific product is right for everyone. That’s the primary reason he advocates getting expert advice. In sum, he reiterates specific steps that retirees can take to better position themselves.

The Securities and Exchange Commission will decide next Monday on its plans for any requirements and timeline for public companies to file their financial statements in an interactive data format.

It is my belief that despite the various newsletters, publications and sections on the AICPA Website, what the AICPA is doing that directly impacts its members can be publicized better by the AICPA.

New York — The American Institute of CPAs has ramped up its mobility efforts to allow CPAs to practice in other states, with mobility bills enacted now in 12 states and legislation pending in 22 other states.

FIDELITY: RETIREES NEED $225,000 FOR HEALTH CAREFidelity Investments has released a report estimating that a 65-year-old couple retiring in 2008 would need approximately $225,000 to cover their medical costs in retirement, a 4.7 percent increase over the 2007 estimate of $215,000. Fidelity has been calculating retiree health care cost estimates annually since 2002. The number has risen a total of 41 percent since then, with an average annual increase of 5.8 percent. The 2008 estimate assumes that individuals do not have employer-sponsored health care coverage. The estimate includes expenses associated with Medicare Part B and D premiums, Medicare cost-sharing provisions such as co-payments and deductibles, and out-of-pocket costs for prescription drugs. It does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.

The Treasury Department and the Internal Revenue Service have issued proposed regulations to provide funding guidance for single-employer defined-benefit plans.

UHY Advisors has become a services partner of business software developer SAP America.

At the Financial Planning Association business solutions conference last month, Julie Littlechild, president of Advisor Impact, presented new information based on a survey of investors about the economics of loyalty. In effect, she was showing what turns a client from satisfied-but-passive to actively engaged in the growth of an advisor’s business. “Client engagement is the outcome of a practice that is structured effectively and a driver of future growth in an advisor’s business,” she says. “Advisors can achieve a balance between a level of service that is both meaningful to their clients and profitable to then, but which encourages clients to be actively engaged in the growth of the advisor’s business.” Vanguard Financial Advisory Services sponsored the study and notes the results underscores that there is a direct economic correlation between having engaged clients and having a thriving practice. Littlechild says that of the investors surveyed (some 1,000), 17 percent were disgruntled, 19 percent were complacent, 31 percent were content, and 33 percent were “engaged.” Actually all of those in the disgruntled section had thought about switching advisors. Obviously, the thrust of any practice is to move clients into the “engaged” category because the economics of loyalty are simply too great to ignore. Keep in mind that the higher up the scale clients move—from disgruntled to complacent to content to engaged—the more services they utilize, including comprehensive financial planning, retirement income planning, tax planning, estate planning, and trust services. Also, it may go without saying that the engaged clients are more loyal clients. They are unlikely to switch advisors. So, how to get clients into this category? Littlechild offers a few tips:

A team of accounting students from Brigham Young University has captured first place honors as winners of the Deloitte National Student Case Study Competition.