Professional development

The New York State Senate and Assembly have unanimously passed a groundbreaking bill that would amend the laws governing CPAs and provide greater public protections for their clients.

Marcum & Kliegman has created a task force to advise investors who may have been defrauded by Bernard Madoff and his investment management business.

It’s one thing to be a leader within your firm, however, it’s quite another to also be a leader within your community.

It's hard to believe we can write another column about pensions and the bad GAAP applied to them, but here we are again, beating the same old drum. In addition, there is a new drum in the Pension Protection Act of 2006.While we're putting this column together, the market is continuing its sliding and bouncing, and the government is doling out money left and right (and in between) to bail out insurers, mega-banks, regional banks, investment banks, depositors, money funds, brokerage houses, and who knows what else.

Government officials now expect 401(k) plan sponsors to conduct periodic due diligence reviews. With respect to their 401(k) or other retirement plans, the problem is that most sponsors (owners) do not have the in-house resources to do so.This is not something that 401(k) plans historically did. On the heels of the recent mutual fund scandals, though, Labor Department officials indicated that sponsors had a duty to periodically investigate plans and benchmark funds and fees.

PLANNERS GET NEW CLIENTSTwo thirds of certified financial planners have seen an increase in potential clients as economic turbulence has increased in the past several weeks, according to a recent survey.

I received some interesting information from Brian Meehan of Celtic, Inc. regarding a little practical advice on how to weather a volatile market when it comes to college savings. He notes that if you are like most people, the current market conditions can cause concern when you see your long-term investment accounts, including college savings and retirement plans, losing their value. He points out that the College Savings Plans Network, a non-profit association representing states who administer 529 college savings and prepaid plans, and an affiliate of the National Association of State Treasurers, encourages people to keep the following principles in mind when making decisions about their college savings accounts during tough economic times: Stay Focused on Long-Term Objectives: As the market moves in up and down cycles, it is vital that one keep emotions out of affecting financial decisions. Look at the performance of your college savings account since inception as well as shorter-term performance. Diversify Your Investments: You need a mix of stocks, bonds, and cash investment options or in an age-based option which typically provides this sort of mix. Make Changes, if at all, Gradually: Invest any new funds into more conservative options and reallocate equity options to more conservative ones. Move funds gradually so as to not lock in, or realize, all of your losses and to be able to take advantage of a market recovery. Limit Reallocations: All 529 plans have a one-time-per-calendar-year rule on making reallocations between investment options. If you have already made a reallocation of your account this year, you cannot make another change until next year. However, you can always redirect new contributions at any time. Make Regular Investments: Often referred to as “dollar-cost averaging,” this approach lessens the risk of investing a large amount in a single investment at the wrong time. Invite Family to Help: Ask your family and friends to help build the college savings by contributing to your account as a holiday or birthday gift. Many plans offer gift certificate forms or contribution slips to facilitate making a contribution as a gift. Talk to your Plan Provider: If you have specific questions abut your 529 savings or prepaid plan, call your plan provider. To learn more about the College Savings Plan Network and 529 college savings plan across the country, visit collegesavings.org.

The Internal Revenue Service has given schools and tax-exempt organizations more time to finish writing their retirement plans.

Accounting firm Weiser LLP has hired an unemployed investment banker and Massachusetts Institute of Technology graduate who gained fame last summer for wearing a sandwich board on New York's Park Avenue that advertised, "Experienced MIT Grad for Hire."

The College for Financial Planning plans to add renewal requirements to some of its professional designations starting next spring.

Worries about the financial crisis are spreading rapidly, with job losses hitting levels not seen in over three decades, and people are wondering if CPAs have the answers to help them get through the turmoil.

The sour headlines lead. Ford wants billions in loans. Car makers’ sales are tumbling, like a too-tall SUV on a tight curve. Delta’s slashing service. Staples and Sears are staggering. GE and Goldman Sachs say their decks are awash.

iPro One and American Business have teamed up to offer insurance products that wealth management advisors at CPA firms can market to their clients.

The Virginia Society of CPAs is offering a free financial wall calendar for consumers, developed in partnership with the American Institute of CPAs.

The success of financial advisors in profitability, revenue growth, and attracting clients was the overriding theme in the 14th edition of the 2008 Moss Adams LLP Financial Performance Study of Advisory Firms, recently released and sponsored by Genworth Financial Wealth Management. For the average firm, new assets from new clients accounted for about two-thirds of growth, expanding assets under management by 13.5 percent. However, the study shows that only one in four firms has a well-defined succession plan and many firms, some 44 percent, have no plan at all. Actually, Dan Inveen of Moss Adams, who prepared the excellent release, said that while the current flux in performance of the financial markets may be causing advisors concern, the demand for objective financial advice is likely to increase. “Forward-thinking firms will recognize this as a time of opportunity and will continue to improve their effectiveness and show value in serving the market. Plenty of potential exists for further growth.” Looking at this in greater depth, the study turned up the fact that advisors in the top performing firms spend the most time on client service and business development. Actually, the top 25 percent of solo firms (meaning firms with one owner/professional) spend 56 percent of their time on client service and business development, compared to other firms that only spend 46 percent of their time on these activities. Moreover, top-performing ensemble firms also gain leverage with non-professional staff. The smallest multi-professional firms (less than $2 million in revenue) employ 1.2 non-professionals for every professional. The same ratio applies for the larger firms ($2 million - $5 million in revenue), which is double at 2.4, thereby allowing professionals to focus more time on business development and client activities, and less time on administrative and operations tasks. Of course, expansion for advisory firms raises new and impending issues as a significant number of firm owners are nearing retirement. Though firms have been trying to recruit and retain experienced professionals, the demand has outweighed the supply. As a result, this could leave firm owners holding concentrated positions in a valuable asset with no ownership transition plan. The 2008 study shows that only one in four firms has a well-defined succession plan and 44 percent have no plan at all. In addition, the aging advisor population, coupled with strong growth in the advisor industry, indicates that transactions will be prevalent in coming years. In fact, within the past two years, 29 percent of firms considered a sale, with 37 percent citing succession as the primary motivation behind this consideration. On the opposite side, more than half (55 percent) of the firms expressed an interest in acquisition, with most citing growth and efficiency as the driving factors. For more information, visit www.mossadams.com/2008advisorstudy.

This live, one-hour seminar, the first in a series covering aspects of our current economic crisis, is essential for all accountants who offer financial planning services. It will feature practical, hands-on insight and information you can put to work for your firm immediately.

The American Institute of CPAs is launching a new series of ads for its "Feed the Pig" financial literacy campaign targeted at adults in the 25-to-34 age group.

Business consulting and internal audit firm Protiviti has updated its Global Financial Crisis Bulletin with answers to the latest questions about the financial meltdown.

I’ve known David Steinberg for some 20 years now. He was introduced to me by one of the major CPA firms in New York City as knowledgeable and honest mortgage broker. I’ve used him many times and have found him quite effective. So, when we hit this financial morass, I thought it might be interesting to see what he had to say while we are in this epic meltdown. “There is no telling where things are going,” says David. But I’d like to share some observations that I believe will withstand scrutiny regardless of where markets are by the time you read this.” The following is from David’s mouth: Cash is King. You’d be amazed how much easier you can sleep if you have that emergency fund to (at least) six months of living expenses. Cash is King II: That emergency fund must be liquid. Having a HELOC (Home Equity Line of Credit) doesn’t count because many banks are getting cold feet and cutting the lines back or eliminating them. So, even if you have perfect credit, there is no guarantee that your HELOC will be there when you need it. Cash is King III: Gains (or losses) are not real until you realize them, when you sell. For years Americans have been feeling rich because their houses and portfolios were appreciating. That wasn’t real. The losses we have experienced in recent weeks as our portfolios have fallen are no more real (unless you sold). If your initial choices were solid, your portfolio should come back when the market comes back. Buy Low and Sell High: I said, “If your initial choices were solid.” All too often people buy speculatively. How do you buy well? Watch Warren Buffett. He won’t buy unless he perceives value. Learn to sit on cash waiting for opportunities. Gotta Know When to Hold’em and Know When to Fold’em: These have been tough times for investors—tough figuring out whether to hold or sell. Stick to stock in good companies that have good management (Warren Buffett) and sell the rest. ‘When’ is the challenge! Sell on your terms—don’t get stampeded into selling at the wrong time. Volatility is a Fact of Life: Hold on! Volatility, which has been at record levels throughout 2008, is not going away any time soon. Get used to it. Strategize for it. Can’t Take the Heat: Get out of the market for the next six months or so if you can’t tolerate the swings. Be prepared to miss some of the glory if the market roars back. Gotta Know When to Buy: Me? I’m buying. Why? Because Warren Buffett is buying. Due to some luck 40 percent of my retirement funds were in cash as of October 10. I told my stock broker to start buying cautiously. (And, remember, it’s not polite to laugh at people.) There’s Gold in Them Thar Hills: Fortunes will be made by those with vision and courage to take advantage of the opportunities that will surely be present in the coming months. For more information, contact him at Dave@SummitFunding.com.

Baby Boomers planning for retirement need to stick to a budget, according to one tax expert.