From the May 2008 issue of Research Magazine • Subscribe!

May 1, 2008

Go-To Guy

As director of financial planning for a thriving fee-based firm in Maryland, Michael E. Kitces serves largely as the self-described "nerd that finds the answer to questions no one else knows the answer to." When an advisor in the firm is stumped, they call Kitces.

Now, with HYPERLINK "http://www.kitces.com/" \t "_blank"The Kitces Report, the 30-year-old certified financial planner is sharing content with a national audience. In his inaugural monthly newsletter in March, Kitces dealt with two important new tax planning developments: the "kiddie tax" rules and a recent ruling from the Internal Revenue Service that cracks down on wash sales with IRAs. With each topic, Kitces offers in exhaustive detail a backgrounder, an explanation of the new rules, and advanced planning strategies or implications.

A sought-after industry speaker, Kitces is bringing a fresh new voice to financial planning topics that have not typically gotten such thorough interpretation.

As Inside Information editor Bob Veres, who closely follows the financial planning space, puts it: "I would say that Michael Kitces is more curious about more difficult subjects than anybody I know. He is one of maybe half a dozen people in the profession who combines a far-above-average IQ with a restless curiosity about the issues and techniques of the planning profession. Understanding legal and technical information is much easier for him than most of the rest of us, and he's constantly trying to figure out how it applies to real-world clients."

Veres says The Kitces Report represents a trend in the marketplace toward increasingly specialized sources of information aimed at very specific target audiences -- in this case advisors who want to stay on top of the latest technical developments in financial planning and who wish to be among the first to apply new tools, techniques and solutions for the benefit of their clients.

Kitces' troubleshooting role as director of financial planning at Columbia, Md.-based Pinnacle Advisory Group, which manages $600 million in assets, led to his new companion title: publisher of Kitces.com, which publishes the newsletter and Kitces' blog, Nerd's Eye View.

"There's really a struggle for strong advanced technical writing in the financial planning space. There are some wonderful attorneys and accountants out there who can talk about a lot of legal and technical issues, but they don't write for a financial planning audience. The information just doesn't translate well," he notes.

"This content is meant to be at an advanced level. For people who haven't necessarily gone that far down the financial planning studies path yet or worked at that level of technical depth, this may not be for them," Kitces adds. "People who are really trying to advance their technical expertise in financial planning and trying to get expanded knowledge, at some point you find a ceiling in our industry. All of a sudden, there's nothing left to read. Hopefully, this fills that gap."

The newsletter will handle only one or two topics a month, allowing for a thorough treatment of each issue. Tentatively slated: the current thinking on safe withdrawal rates; the "philosophy" of selecting long-term-care products; what happens when you apply Monte Carlo techniques to portfolio optimizers; and different ways to approach a client's risk tolerance. In coming months, Kitces.com will also begin featuring webinars.

Kitces, who grew up in the mid-Atlantic, says he "landed somewhat randomly" after college in the insurance industry, working as a life insurance agent and registered rep. Along the way he developed a passion for comprehensive financial planning.

In 2006, Kitces earned a master's in taxation from the University of Tulsa. He also has a master of science in financial services from American College and a bachelor of science in psychology from Bates College. This summer he is due to get his third master's degree, this one with a focus on financial analysis.

"I just have this fascination to continue to learn new things, particularly to see how they intersect with what I already know and am familiar with. That's why financial planning in particular came along as something I have a passion for. It's the nature of being a generalist in areas that overlap. As you learn more in any one area, you can see more intersections," says Kitces.

"At the end of the day, I enjoy the opportunity to teach that and share that with other people. It's one thing to just try to absorb information like a sponge. It's another thing to really have the opportunity to talk to people, to interact, to have dialogues on all of these issues," he adds. "For me, just the opportunity to talk to people about this stuff is the springboard to generating more ideas and fleshing out more thoughts about how things can be done differently or better."

Going forward, Kitces says advisors -- "knowledge workers," he calls them -- will have to stay current in order to remain competitive.

"In a world where a lot of the products we implement are becoming increasingly commoditized, the way you differentiate yourself is your intellectual capital: the knowledge you bring to the table that is uniquely you," he says. "The difference between those who can excel and those who cannot are those who develop enough knowledge to guide people to solutions. You won't have every answer. But as the world gets more and more complex, you have to at least identify the problem."

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Freelance writer Ellen Uzelac is based in Chestertown, Md.; the former West Coast bureau chief and national correspondent for The Baltimore Sun, can be reached at ellenuzelac@msn.com.

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