In “The Sixth Sector” in the November 2004 issue, Frank Patzke thoughtfully addressed critical areas that many financial planners and advisors miss. His heartfelt description of his journey was instructive to colleagues or anyone facing similar issues. However, as a CPA who owns an eldercare management company, I would like to add a word of caution. No matter how many checklists or how thorough the planning, those with financial knowhow do not always have the proper training and experience to make sound decisions when it comes to end-of-life issues.
I often ask accountants, “Would you like a nurse to do your client’s taxes? Why, then, do you think you should choose a nursing home?” In the last 10-15 years, a profession–geriatric care managers (GCMs)–has evolved. Not only are the GCMs trained and experienced, they often become good referral sources for financial advisors. You can reach a care manager in your area by contacting the National Association of Professional Geriatric Care Managers at www.caremanager.org.
Laurie Duncan, CPA
Choices for Aging, Inc.
Falls Church, Virginia
Focus on Fiduciaries, Not Fees
I enjoyed the spirited debate between Victor Conrad and Scott Hanson (“Splitting Hairs?” October 2004) regarding the differences between commission compensation versus advisory fees. The fact of the matter is we all get compensated for our service. The fee-only planning community has mistakenly focused on “fee” (equals objective) versus “commission” (equals conflicted) in drawing distinctions between brokers and planners.
The key issue for clients is this: What standard of care is my advisor held to? Anything short of a fiduciary standard between the client and advisor is not in the client’s best interest. My guess is that Mr. Hanson’s broker/dealer requires him to operate under NASD Rule 2310 (broker suitability) and not a fiduciary standard of care (except in ERISA situations, where the fiduciary standard is a regulatory requirement). As we all know, the broker suitability standard falls far short of the protections afforded clients under a fiduciary relationship.
Would clients prefer the benefits of a fiduciary relationship where their advisor is required to put the client’s interests ahead of the advisor’s own? You tell me.
Mike Palmer, CFP
The Trust Company of the South
Raleigh, North Carolina
Voice Hears an Echo
It is always a pleasure to read [Mark Tibergien's] column. In the October 2004 article, “A Voice in the Wilderness,” I could not agree with you more. Helping my father, a doctor, value his practice has been eye-opening. I think that in professional companies (accounting, law, financial advising, medical/dental), the quality of the company is based enormously on the quality of the sole practitioner/partner. Though there are some efficiencies of scale, client meetings are still client meetings. You cannot effectively pass off the face time and still maintain a successful business.
With that said, I agree that you must take into consideration the cost of the advisor in the valuation equation.
Thank you very much for your continued insight into the industry.
Joshua B. Gottfried
Thanks for the Clarification
In your article, “Complicated Gifts” in November’s Investment Advisor magazine, you stated, “(By contrast, donors of cash or securities to public charities can deduct up to 50% of AGI, and donors of cash or securities to private foundations can deduct up to 30% of AGI.)”
You are only partially correct. Securities are deductible to 30% of AGI for public charities and to 20% of AGI for private foundations. See ?170(b)(1)(C)(i) and ?170(b)(1)(B).
David Woods, EA, ChFC, CLU
Woods Financial Services