Financial planning

Sherman Hanna is a professor of consumer sciences at Ohio State University. He is also the co-author of a new measure that he says is a better way to calculate how much risk people are willing to take in their investments. It has an interesting twist.

FIDELITY, AICPA EXTEND PARTNERSHIP PACT: Financial services conglomerate Fidelity Investments has extended its partnership with the American Institute of CPAs to assist CPAs in establishing investment advisory practices.

* HENSSLER ENTERS ACCOUNTING JOINT VENTURE: The Henssler Financial Group, a Kennesaw, Ga.-based concern, has formed a joint venture with the Atlanta-area accounting firm of Dickinson & DiLuzio to form a new accounting division of the firm - Dickinson, DiLuzio & Henssler LLC.The new entity will provide financial consulting services for both individual and institutional clients. This partnership expands Henssler to two offices and a staff of more than 55.

The Internal Revenue Service's new rules for qualified retirement plans went into effect on March 28, but the ripple effect from the rules has yet to play out.

With limited exceptions, the tax on married couples filing jointly usually has been lower than the combined tax on married couples filing separate returns.

While college costs continue to rise faster than the level of inflation, parents and grandparents now have more tools than ever before to better afford this cost years before a child graduates from high school.To most parents, saving for their children's higher education costs can seem like a daunting task, which makes planning all the more critical.

A homeowner may exclude up to $250,000 of gain from the sale or exchange of a home if he owned and used it as his principal residence for at least two of the five years before the sale or exchange took place.The maximum exclusion is $500,000 for joint filers, if certain conditions are met. A taxpayer who uses a property partially as a principal residence and partially for business purposes is treated as using the entire property as his principal residence for purposes of the two-year use requirement if the residential and business parts are within the same dwelling unit. The exclusion doesn't apply, however, to the gain resulting from depreciation taken for partial business use of the residence after May 6, 1997.

AMEX TO SPIN OFF FINANCIAL ADVISORS BUSINESS: American Express Co. said that it will spin off its American Express Financial Advisors unit to shareholders to focus on its credit card, charge card and travel services businesses.Shareholders would receive 100 percent of the common shares of the company, which would be renamed American Express Financial Corp. AmEx said that it expects to complete the transaction in the third quarter.

Framingham, Mass. - A survey of 220 businesses revealed that while compliance costs associated with Sarbanes-Oxley Sections 404 and 302 are front-loaded, once companies are through the process, there is a great deal of proportional value.The poll, conducted jointly by International Data Corp. and RevenueRecognition.com, also noted that a compliance "chasm" exists and that companies that have crossed it have achieved more effective results at less cost.

No matter what else may happen in 2005, the markets for personal financial planning are set to explode. It's not just the Bush administration's announced plans to overhaul both Social Security and the income tax systems. Nor is it just that an economic upswing and low interest rates are pushing the stock markets back up to pre-2000 levels.There are certain fundamental changes taking place in the software industry, and in the markets for financial planning software in particular. Three trends are notable at the beginning of this year: * The software is going online. In addition to traditional application software provider eMoneyAdvisor, MoneyTree and EISI have both moved strongly into Web-based services. Other software vendors must carefully weave between the obvious advantages of an online service and the wishes of subscribers, who may not want to move so quickly onto the Internet. But the trend has an air of inevitability about it.

AARP, the high-profile lobbying group for the roughly 36 million Americans over 50, has come out swinging in the fight over Social Security reform with the release of a poll showing a lack of support for President Bush's plan to allow investors to divert some of their Social Security taxes into private accounts.

Some of your clients may not yet have made their contributions to traditional or Roth IRAs for 2004, but plan to make them before filing their 2004 income tax returns. Others may be planning to contribute the maximum amount possible to their IRAs for 2005 as soon as possible.

FPA AWARDED FOUNDATION GRANT: The Financial Planning Association has received a $252,468 grant from the Foundation for Financial Planning - the largest grant ever given by the foundation.

Many of the country's wealthiest people 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.

How would you like to be the primary financial coordinator for the wealthy families in your community? How would you like to be earning a healthy fee for this advice, a fee that goes far beyond completing tax returns? Does this sound too good to be true for small to midsized accounting?

In my last article, I discussed the above-the-line "education deduction" available for many individual taxpayers for qualified tuition and related expenses. Taxpayers eligible to take the education deduction often will also be eligible to take either the Hope Scholarship or Lifetime Learning Credits for the same expenses.

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.

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.