Ergonomics Panel

Einstein Lecture

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: