Wealth management

NAPFA LAUNCHES PSA CAMPAIGN: The National Association of Personal Financial Advisors, a 1,300-member association of fee-only financial advisors, has launched a consumer-oriented public service campaign aimed at educating Americans about the need for financial professionals to hold themselves to a fiduciary standard. The campaign is titled "Focus on Fiduciary."NAPFA said that the strategy behind the campaign is to highlight the issues surrounding fiduciary standards in the financial industry while helping consumers ask the right questions of their financial advisors. To support the campaign, NAPFA has developed a number of resources available to the industry and consumers alike, including:

Some 50 percent of Baby Boomers ages 50 to 59, with anywhere from six to 15 years before retirement, indicated in a recent survey that they don't know how much money they'll need when they finally stop working.Furthering their financial dilemma, 60 percent of those polled said that they intend to save more than they do, but don't always get around to it.

Most people who work for a living, either as employees or as self-employed persons, are covered by Social Security's old age, survivors and disability insurance program.As a retirement program, Social Security pays a monthly cash benefit to workers who have the equivalent of at least 40 months of work under Social Security, and who are at least 62 years old. The amount of the benefit is based on the worker's primary insurance amount. The PIA depends on how long he worked under Social Security and the amount of his Social Security wages. Social Security benefits may also be paid to a retired worker's qualifying dependents, such as a spouse, a widow or widower, and certain children. The benefits of a worker's dependents also are based on the worker's PIA.

Members of the military serving in Iraq, Afghanistan and other combat zones can now put money into individual retirement accounts, even if they received tax-free combat pay, according to the Internal Revenue Service.

An old colleague of mine from Melbourne, Australia, sent me some information that his country's financial planners have just implemented new guidelines to help prevent conflicts of interest and to improve confidence in the financial planning sector.

Yep, it's that time of the year again! CPA Wealth Provider is calling for nominations for its Fourth Annual Financial Planning Awards in any of the following categories: CPA/Financial Planning Firms, Broker/Dealers, and Financial Planning Software Vendors.

Nine of the 18 insurance firms that provide variable annuities through financial advisors affiliated with Raymond James Financial Inc. will begin offering new, less expensive investment products this week, meeting a deadline set by the financial services firm.

Following the old saw that "What goes up must come down" - and vice versa - advisors who employ a strategy of buying cheap like it when market sectors decline.By the same token, some economic-minded advisors are continually on the lookout for market laggards in the expectation that the next swing might trend upward. Top performers over the recent past are the likely suspects for future price declines, say experts.

COURT TELLS SEC TO LEAVE HEDGE FUNDS ALONE: The U.S. Court of Appeals for the District of Columbia Circuit has dealt a blow to the Securities and Exchange Commission's plans to more closely regulate hedge funds. The court ruled unanimously in late June that the SEC had overstepped its authority in defining hedge fund investors as "clients" of a fund manager, and subsequently ordering any manager with 15 investors or more to register with the agency.SEC Chairman Christopher Cox said that he hasn't yet decided whether or not the decision will be appealed. In a statement, he said that he had already instructed SEC staff to evaluate the court's decision, as well as to provide a set of alternatives for the commission's consideration. "The SEC takes seriously its responsibility to make rules in accordance with our governing laws," Cox said. "The court's finding that, despite the commission's investor protection objective, its rule is arbitrary and in violation of law requires that going forward we re-evaluate the agency's approach to hedge fund activity."

In an effort to increase charitable giving across the U.S., the Fidelity Charitable Gift Fund, an independent public charity within the donor-advised fund program of financial services conglomerate Fidelity, has rolled out the Charitable Investment Advisor Program.Fidelity's new offering allows independent investment advisors to provide discretionary investment management to the Gift Fund for contributions made by the advisors' clients.

An individual who is an active participant in a qualified retirement plan cannot make deductible contributions to a traditional IRA unless her modified adjusted gross income is below certain specified levels.The level depends on the type of income tax return the individual files. For single taxpayers and heads of household, the otherwise allowable deduction is phased out ratably in 2006 and later years, when the taxpayer's MAGI is between $50,000 and $60,000.

Brand-new exchange-traded funds are coming onto the market faster than most advisors can keep up with them.Issuers such as PowerShares and Barclay's Global Investors file for groups of new offerings in the double digits, and the total number has topped 216 funds with aggregate holdings of $334 billion. The flood of new products means advisors' mailboxes are stuffed with offering memoranda. Most end up in the circular file, but a few have made their way into clients' portfolios alongside some of the older issues.

Using cash in a like-kind exchange is similar to passing around the proverbial "hot potato" - you don't want to be the one holding the potato, i.e., the cash, at the end of the transaction. If you do so in a like-kind exchange, you are probably holding "boot" (non-qualifying property), which is taxable to the extent of any gain otherwise locked up in the relinquished property (i.e., the difference between its fair market value and basis).Sometimes, strategies that involve the use of cash to facilitate like-kind exchanges under Code Section 1031 begin to seem like shell games, in which labels matter a great deal. In the end, however, the only labels that have been successfully applied are those that have made sense within the basic framework of Section 1031.

* CCA OFFERS NEW DEFINED-BENEFIT PLAN: CCA Small Business Group LLC, a provider of retirement plans for sole proprietors and small businesses, has unveiled its new OurMax plan, a Web-enabled, high-deferral retirement plan for small business owners.The plan is a type of defined-benefit plan, which allows business owners to save up to $200,000 annually for retirement.

Nobody wants to be the bearer of bad news, but small business owners should be aware that the Internal Revenue Service is stepping up its examinations of companies' retirement plans this year, hoping to catch those that are cheating their workers or the government, or both, as well as to ensure that the plans meet federal regulations.Traditional pensions, 401(k) plans and profit-sharing plans are all on the agenda.

An individual who is planning to retire will often roll over the assets in her qualified plan into a traditional IRA, e.g., so that she will have more control over how the funds are invested.If the plan permits (and only if the plan permits), such an individual may also be able to roll over the assets in a traditional IRA to one of the following types of plans:

Testifying with blunt honesty before the Senate Banking Committee, Fannie Mae's top executives said that it will be years before the mortgage giant can recover from an accounting scandal.Fannie Mae's president and chief executive, Daniel Mudd, alongside chairman Stephen Ashley, testified that the Fannie Mae of today is nearly unrecognizable from before. In mid-June, Mudd volunteered to return some of his salary from the period that the accounting irregularities occured. He served as Fannie Mae's chief operating officer from 2000 through 2004.

The Financial Planning Association has unveiled the FPA Career Center, a tool designed to help those in the market for a new job and those looking to hire new employees.The site has more than 170 financial planning job openings from 139 firms throughout the country. It offers employers targeted access to financial planning professionals, and offers job seekers free and confidential resume posting.

Although many Americans hope to retire as millionaires, many are on a track that falls considerably short, according to a USAA survey conducted by Harris Interactive.According to the results, 51 percent of employed U.S. adults who are not retired say that they want to save $1 million or more for retirement, but 30 percent haven't set aside anything at all. In fact, only 26 percent have saved more than $50,000. To make up for the shortfall, 39 percent have asked their parents for money, while 13 percent have turned to a sibling and 11 percent have approached another family member.

I was raised in a family of medical people: father, brother, son, to name a few. Where other kids in our neighborhood might have had a Cross or a Star of David hanging over their beds, I had a caduceus. Thus, you must immediately ask, why am I writing columns such as this? Well, the answer is relatively simple. To repeat the famous cliche, I really couldn't stand the sight of blood, especially my own.