Corrections or additions?
This article by Tony Faber was prepared for the October 18, 2000
edition
of U.S. 1 Newspaper. All rights reserved.
From CPA to CFP?
CPAs are constantly being told that they are uniquely
qualified to be financial planners. In fact, nothing could be further
from the truth.” Such is the blunt message of Bernard Kiely,
who is both the organizer of and a speaker for the New Jersey Society
of Certified Public Accountant’s (NJSCPA) annual personal financial
planning conference. The meeting will be Tuesday, October 24, at 7:45
a.m. at Sheraton Woodbridge Place. Cost: $225. Interested parties
can go to njscpa.org or call 973-226-4494, extension 240.
“A lot of these meetings consist of a room full of tax accountants
wishing they were financial planners,” says Kiely. “We realize
that CPAs already know taxes, so we will speak entirely about
investments
and financial planning, to give them information they don’t already
have.” For this reason, the program could be of benefit to any
financial planner or anyone who manages investments, whether or not
they are a CPA.
Other speakers at the NJSCPA event will be Thomas G. Giachetti
of Stark & Stark on Lenox Drive, who will discuss “Integrating
Investment Services into Your Practice;” John D. Cooney Jr.,
“Long Term Care Insurance: a Primer;” and Robert Fourman
of Sawheny Systems, doing a “Financial Planning Software
Review.”
The event will conclude with a panel discussion titled “Financial
Planning: Do’s and Don’ts.”
Kiely has a BA in accounting from Upsala College, and an MBA in
finance
from Rutgers University. He is also a certified financial planner,
and has been named to Worth Magazine’s list of the top 250 financial
planners in the U.S. each of the last two years. Together with his
wife, Yvonne Kiely, he runs Kiely Capital Management, located
in Morristown.
Kiely emphasizes that financial planning is a completely different
profession from accounting, and that a CPA’s academic background does
not address knowledge of investments such as mutual funds, or how
to go from having a prospect walk in the door to making them a
detailed
investment proposal.
The key first step when speaking to a prospect is “to get the
potential client to articulate goals, the more specific the
better.”
A client may have a specific desired future amount of money, such
as $1 million by age 65 or enough money to put children through
college.
Other clients may not have a specific monetary figure they are trying
to achieve, in which case Kiely will do a comprehensive financial
plan, which charts all the client’s expenses, and then looks at how
much disposable income will be left over depending on what rate of
return the client’s money achieves.
He then discusses what investments will be required to achieve those
goals, and what the risks involved are. “The process can be
eye-opening.
Sometimes a client says `yikes!’ when they realize that how aggressive
they’ll have to be to make their goals and they’ll either scale back
their goals or move back their time horizon.”
Kiely goes over projected rates of returns with his clients, showing
them different possible returns depending on different proportions
of stock funds and bond funds. He emphasizes that projections about
stock fund returns are extremely variable, particularly in the short
run. He runs computer projections showing past rates of return with
a random factor equal to the standard deviation of such returns. The
clients thus get a sense of what the chances are of achieving their
goals.
Kiely deals in mutual funds rather than individual stocks for his
clients because “the best stock pickers in the world are mutual
fund managers.” There is another very practical reason for
financial
planners and their clients to use mutual funds. “There aren’t
just enough hours in the day for a financial planner to research and
follow a whole lot of different stocks and still do their job. I want
a manager who watches every stock every day. I can’t do that, and
neither can most clients. A mutual fund manager can.”
Once clients set goals and decides what degree of risk they are
comfortable
with, Kiely will generate a proposal that fits their needs. When it
gets down to picking individual mutual funds, Kiely focuses on certain
factors:
Above average return for its type.A fund manager with a long tenure.Consistent style. “You don’t want a manager who’sbuying large caps today, and small caps tomorrow.”Consistent investment type. Many funds boost returns byinvesting in more lucrative but riskier investments outside itsinvestmenttype, such as value funds that buy a lot of growth stocks.Below average expense ratio. Even in no-load funds, inwhich Kiely exclusively deals, they’re not all the same.Low turnover of investments.Kiely uses Morningstar’s Principia Pro Software, which usesa giant, sortable spreadsheet to cover every existing mutual fund,to get information about these factors. He is not tied to anyparticularfund company, and the Vanguard Index 500 Fund is the single biggestholding of his clients.In his presentation, Kiely will also cover a good deal of other issuessurrounding mutual funds, such as the difference between value andgrowth funds, sector weightings, different market capitalizations,capital gains exposure, and more.Kiely emphasizes that being a financial planner is not something toenter into lightly. However, once a CPA becomes knowledgeable aboutvarious investments, a CPA can then combine that with a full rangeof other services, such as tax planning and preparation, estateplanning,life insurance, loans, and advice about any other key financialdecisionthey have to make. The financial payoffs and the exciting nature ofthe job can make it extremely worthwhile. In his experience, “abad day of financial planning is better than a good day ofaccounting.”— Tony FaberTop Of PageErgonomics PanelAnyone who has bought a headset to stave off a soreneck, a sore shoulder, or carpal tunnel syndrome knows that the rightkind of ergonomics can increase productivity.The Occupational and Corporate Health Department of Robert WoodJohnsonUniversity Hospital at Hamilton is holding a free breakfast seminaron Tuesday, October 24, from 8 to 11:30 a.m. in the hospital’sauditorium.609-631-6847. The speakers include two doctors from the hospital,John J. Coumbis and Chaim Austin, plus two ergoTEAM consultants, DaleLawson, and Karen Grant-Brown. Early reservations are advised. Call609-631-6847.Coumbis and Austin will address the definition of ergonomics. Lawsonwill discuss the rather controversial ergonomic standards proposedby OSHA, and Grant-Brown will provide a computer user’s guide. Thenthree suppliers — for seating, for products, and for headsets— will offer solutions.Top Of PageEinstein LectureRichard J. Roberts will give the annual AlbertEinstein Memorial Lecture honoring Nobel Prize winners. The lectureis sponsored by the Princeton Chamber, Sarnoff Corporation, BASF(formerlyAmerican Cyanamid), Bovis Lend Lease, and Panasonic Corporation. Itwill be at Princeton University’s Dodds Auditorium in the WoodrowWilson School on Tuesday, October 24, at 4 p.m. It is free byinvitation;call 609-520-1776.Roberts, who won the 1993 prize in medicine, will speak on theimportanceof restriction enzymes and methylase genes to the biotechnologyindustry.His discovery — that genes in cells are separated by introns(piecesof DNA that have no encoded message) and are not laid out incontinuousstrands — changed the understanding of the basic structure ofgenes and provided insights into the development of cancer and otherhereditary diseases.Previous StoryNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
