Family Office

Bernard Kiely uses all his resouces--notably his wi

How to know if your financial planning practice is truly a family business: (1) Your daughter understands the difference between an open-end fund, closed-end fund, and unit investment trust--and she's still in elementary school. (2) Mutual fund reps at conference booths know your entire family by name. (3) Your spouse--whom you met in a college course called "Money and Banking"--regularly discusses irrevocable life insurance trusts with you over dinner. (4) Your daughter's idea of playing with her dolls means not serving them tea and cookies, but balancing their little checkbooks and tracking their investments.

Kiely Capital Management in Morristown, New Jersey, fits the bill on all counts. Bernard Kiely and his wife, Yvonne, have been serving clients as a team for nearly a decade, and while not everyone would enjoy having their work life so permeate their family life, Bernard loves it. He isn't the kind of guy who needs to get away from work. This is a man who, when asked about his hobbies, enthusiastically mentions "speaking about financial planning at conferences" before stopping himself: "Oh, wait, I guess that counts as work." His daughter, 10-year-old Alexandra, often brings her schoolbooks to the office and works nearby (occasionally bailing Daddy out if his e-mail isn't working properly). Yvonne frequently takes work home, where she home-schools her daughter and reviews client accounts while Alexandra works on assignments. One of Alexandra's first experiences with a computer was hitting "return" after each client account her mother entered in Centerpiece. And the family often combines business with pleasure, traveling as a threesome to industry conferences.

Kiely Capital Management
Bernard M. Kiely

Kiely Capital Management, Inc.

10 Park Place

Morristown, New Jersey 07960-7101

973-455-1894 (under construction)

Year practice began: 1983

Number of planners in office: 2 planners, 2 part-time assistants (3 during tax season)

Number of clients: 45 investment management clients, 135 tax clients

Compensation method: Fee-only

Average fee for a comprehensive financial plan: $4,500

Average fee for a retirement plan: $2,750

Fee for managing assets: 1% of first $1 million, 0.75% of next $1 million, 0.5% thereafter

Minimum office consultation: $350 for two hours

Client demographics: Corporate executives in their late 40's in need of tax and stock option planning; nearly-retired and retired individuals in need of retirement planning and investment management

Education: BA in accounting, Upsala College; MBA, Rutgers University

Previous incarnations: U.S. Navy petty officer, auditor, corporate controller, accounting professor

Professional designations: CPA, CFP

Outside interests: Gardening, woodworking

Quotable quote: "A bad day of financial planning is better than a good day of accounting."

Kiely hopes to instill in his daughter an appreciation for the freedom of self-employment as a planner. "We don't have to ask permission to go on vacation. We take the laptop, we take the cell phone, we've got voicemail--we can conduct business from Disneyland." But his enthusiasm for the profession isn't limited to an audience of one. In the past year, his "hobby" has taken him from New Jersey to Pennsylvania, Providence, Minneapolis, and New Orleans, where he's explained the benefits of his chosen line of work to members of the AICPA, the New Jersey Society of CPAs, the Pennsylvania Institute of CPAs, NAPFA, and the Central New Jersey Estate and Financial Planning Council.

"Cheerleader" is perhaps not the right word for a 52-year-old, gray-haired man in an oxford shirt, tie, and dress shoes. Then again, his intense enthusiasm for his profession certainly makes it fitting.

Spreading the Word

With names like "Managing Mutual Funds for a Fee" and "How to Write Investment Policy Statements," the sessions Kiely typically conducts are designed to attract new planners to the profession and get them started on the right foot. Kiely has a particular interest in CPAs who are integrating financial planning into their practices, in no small part because his own practice began as a CPA firm. "I started the practice in 1983 in a two-room office, and ran an ad in the local paper trolling for tax returns, which I did for $5 an hour," he says. "I turned down three jobs [as a company controller] to go it on my own, and I swore to myself when I started the business that I would do whatever I could to keep from being a traditional bean counter."

Initially supported by his wife's substantial income from another job--"a great luxury for a new planner"--as well as the college and CPA review courses he taught and the tax returns he did, Kiely was able to make a go of it and open his own business. He earned his CFP in 1985; his wife joined the practice in 1990. The road from preparing $5-an-hour-tax returns to being a nationally recognized financial planner hasn't been smooth, but he says that is precisely what makes him valuable to CPA-planner wannabes. "I can cut five years off the learning curve," he says, "because I'm an expert in what doesn't work."

Guiding CPAs into the profession could be seen as shooting himself in the foot--more competitors, right?--but his evangelical zeal is unhindered by such concerns. "In many cases, the CPAs that want to become planners have already done so," he says. "About a third of NAPFA members are CPAs." What's more, if CPAs have successful accounting practices, many are already putting in 60-hour weeks. They don't have time to learn about a whole new field. Kiely once asked a CPA friend who'd passed the CFP exam why he never pursued planning any further. "It would be like adding dentistry to my accounting practice," the friend responded. "It's a whole new area." Not all CPAs have the right personality for it, either. Accounting trains people to report neatly on the past, not make projections about the ever-shifting landscape of the future. "When I was an auditor for Coopers & Lybrand, I used to joke that if we were working at a client's building and the building was on fire, we wouldn't know about it until the following year, when we conducted the audit," recalls Kiely.

To Kiely, getting CPAs pointed in the right direction in financial planning means a number of things. First is NAPFA membership, or at least a firm grounding in fee-only principles. A devoted member of NAPFA--he's currently on the organization's National Education Committee and Northeast Regional Board of Directors--Kiely calls joining NAPFA "the single best professional decision [he] ever made."

"Before I joined, I felt like I was the only planner in the world," he says. The membership-wide e-mail network, conferences, workshops, and networking helped fill that void. Kiely currently hosts a monthly NAPFA study group of five to 15 people in his third-floor office just off the Town Green in Morristown. While he shakes his head at the group's title--"'study group' makes us sound like a bunch of nerds sitting around reading books"--he says he benefits tremendously from the interaction. "If you had a bad day with a client, you throw it on the table and we'll kick it around and offer you advice. We may have a topic. We may not. We exchange ideas. The main thing is that you're not working in a vacuum." Attendees at these confabs are not limited to NAPFA members, either: "I drag in any CPA with any interest, people who are just starting to convert to fees, anybody."

"Bernie, I'm Not Dead Yet. You Said I Would Be"

At a recent study group meeting, one participant innocently asked a question about his use of Monte Carlo simulations. Kiely booted up his Excel spreadsheet and its Monte Carlo add-on software--he uses Crystal Ball 2000, from Decisioneering, Inc.--and by the end of the session, he had the simulation running on three computers and people jumping over each other with questions. "They were going, 'What if you change this number?' 'Wait, and what if you change that number?' 'How about this one? Then what happens?' It was great. That's how we learn," he says.

Monte Carlo simulation, a technique used to calculate the probability that a client will achieve her financial goals, is one of Kiely's financial planning passions, and a frequent topic in his presentations, conversations, and writings. Rather than basing calculations on static numbers, say, an assumption of 11% returns every single year, Monte Carlo simulation uses a computer's number-crunching power to run through a series of more realistic, varied scenarios (10% one year, 11% the next, 12% the following year, 9% the next year). Then, rather than simply spitting out a dollar amount that the client will hypothetically have at retirement, the model calculates the probability that the client will have the amount she needs. Standard deviation and performance figures used in the calculations come from Kiely's investment management software of choice, Power Optimizer (from, formerly Wilson Associates).

Bernie's Do's and Don'ts

When someone thinks of financial planning, you want him or her to think of you first. That kind of recognition only comes as a result of years of active marketing. Here are Kiely's tips for staying visible.


Nurture contacts with your local newspaper. Call the business editor of your local paper and offer yourself as a source for personal finance stories. "I tell them to call me if they want a quick education in a certain topic, even if they're only going to use me as a behind-the-scenes source," says Kiely. Be helpful, and you're likely to find yourself quoted frequently.

Let your fingers do the walking. "I get a third of my clients from the Yellow Pages," says Kiely. "People say, 'WHAT?! The Yellow Pages?!' But yes." The trick is to keep the ad focused: "So many say, 'corporate, non-corporate, big business, small business, and on and on. Mine says, 'Financial Planning. Investment Management. Tax Preparation.' That's it."

Become an author. While it's fun to see a published article with your byline on it, reprints of the article are also great badges of credibility for clients. And it's not as hard as you think. Kiely has been published in the New Jersey Law Journal, Accounting Today, and other publications, simply by calling up and asking if he could write for them.

Speak out. Call trade groups and local organizations and ask if you can speak at a meeting. "When I first started in the business, if I could get two people to stand still, I'd hold a workshop," says Kiely. Be sure to send out press releases indicating the topic, location, and time of your presentation, too.


Publish a newsletter. Kiely doesn't. "I get a newsletter from somewhere, I go, 'Oh, that's nice,' and whoosh, it goes in the trash," he says. "I figure other people do it, too."

Advertise. The only item in Kiely's ad budget is his 1-by-1-inch Yellow Pages display ad.

One of Kiely's primary clienteles consists of nearly retired and retired individuals who need to know if they're going to run out of money before they run out of years. Monte Carlo simulation is ideal for them. "I'll literally have people come in here on a Monday morning and say, 'I just retired from AT&T last Friday. I have $900,000, and I'm scared to death.' They need immediate answers. They need to know: 'Am I making a mistake?'" Kiely uses Monte Carlo to help them answer that question, examining the client's future financial situation in light of different inflation scenarios, potential cash flow needs, and investment returns.

What most people don't realize about traditional spreadsheet calculations is that they calculate the average of the possible scenarios, and thus have only a 50% chance of coming true. "One day I did a retirement plan for a guy that said he would have $300,000 when he was 95. He was happy, and I was thinking, 'You shouldn't be, because that's only a 50-50 chance.'" By using Monte Carlo, Kiely can communicate to the client the variability of the future, rather than lulling them with a single magic number that seems definite, but isn't definite at all. "It's like saying, '70% chance of rain'--I can tell him his chances of achieving his goals." But Kiely tries to be conservative in his assumptions. "I'm terrified that the client is going to end up with less than I said. I don't want him coming back to me when he's 85 and saying, 'Bernie, I'm not dead yet. You said I would be.' So I assume everyone will live until at least age 95."

The "Two-hour Special"

Besides the retired and nearly retired, Kiely's other clients are generally executives in their 40s who earn $150,000 to $1 million a year and are seeking stock option planning, tax planning, and investment management services. Kiely tailors his services and marketing materials to these two specific groups, typically charging $2,750 for a plan for retirees and $4,500 for a comprehensive plan for the working execs. Portfolios are composed of mutual funds; he charges 1% of assets for the first $1 million, 0.75% of the next $1 million, and 0.5% thereafter.

Lest anyone accuse him of serving only those with well-lined pockets, Kiely also provides a "Two-hour Special" to people of any net worth. For $350, Kiely will unplug the phone, shut the door, and let the client pick his brain for two hours on any aspect of personal finance they choose. "I don't like to say no to anybody. People will call and I'll say, 'My fees are too high for you, but I'd like to help. This is an alternative.'" He often finds himself advising newlyweds on how to allocate 401(k)s, how much they'll need to put down on a house, or how he uses Morningstar to choose a mutual fund.

For Kiely, a former Rutgers University accounting professor and CPA review course instructor, the teaching aspect comes naturally. "You sit down, you help people, you give them what they really want and set them in the right direction." Whether they are lower-income clients, high-net-worth executives, or fledgling financial planners, Bernie Kiely's mission is to steer them straight.

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