Making a Difference - NAPFA

nApFA Advis r 

mAgAZine 

Making a 

Difference 

Susan John, 

Founder, 

Financial Focus, Inc. 

december 2012

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Rating Metrics as of the date stated. For funds with at least a three-year history, Morningstar calculates a Morningstar Rating TM based on a 

Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, 

loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in 

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2 nApFA Advisor deCember 2012

From the editor 

do You do groupon? 

nApFA ContACt inFormAtion 

3250 n. Arlington heights road, suite 109 

Arlington heights, iL 60004 

800.366.2732 • 847.483.5400 

info@napfa.org www.napfa.org 

FAX: 847.483.5415 

If you’re a consumer and have spent any time 

online in the last two years, you’ve become 

aware of the array of discount-certificate services 

that have emerged. Groupon and LivingSocial are 

probably the two biggest vendors, but there are 

scores of competitors, each delivering e-mails of 

tantalizingly deep discounts for food, products, 

services, travel, and much more. 

I’ve been seduced into purchasing a number of these products 

and services, and I’ve been satisfied with the results. I haven’t had 

a single problem with a merchant refusing to honor my coupon, 

and I haven’t piled up so many that I couldn’t use them before their 

expiration dates. Still, I wondered whether the time I spent looking at 

the offers was worthwhile. 

Each of the vendors I’ve used keeps online records for at least 

a year. With a few clicks, I was able to come up with this tally: 

24 purchases for a total of $1,773. My purchases included several 

restaurants, two hotel visits, a rug, and numerous tickets to sporting 

events, theater, and movies. 

The purchases of $1,773 were “worth” a total of $3,610 to me. 

That’s the face value of the coupons that I redeemed, or a savings of 

slightly more than 50 percent. In most cases, I think the redeemed 

value is accurate. For example, a $50 voucher at a restaurant 

(purchased for $25) is really worth $50. On the other hand, a halfprice 

room voucher at a hotel with a published rate of $280 is 

probably worth less than that because I would have been able to get 

some type of discount through some other means. 

So, I’m happy. But are the merchants happy? Frustration by 

“partners” of the coupon companies has attracted a lot of attention this 

year. Merchants say that they get a flood of price-oriented, one-time 

customers, rather than attract genuine long-term prospects. 

All of this made me think about what would happen if a NAPFA 

member offered a Groupon deal for a comprehensive financial plan 

or on hourly advice. Could an advisor deal with an influx of 30 new 

clients? Would the firm want to serve those bargain shoppers? 

Many advisors who charge an asset-based fee say that financial 

plans are loss leaders. If that’s true, then selling the loss leader for 

$750 instead of $1,500 isn’t a huge problem. The bigger risk is 

attracting clients with few assets to manage, and for whom doing a 

plan will not lead to a long-term engagement. But I see silver linings. 

An advisor could do a simple plan without implementation of the 

recommendations; he’d be helping someone who needs financial 

advice and spreading the word about Fee-Only planning. In addition, 

those plans would be a great way to train a junior advisor. 

For an hourly advisor, three hours at a discounted rate seems like 

a great way to find prospects—though it, too, would attract some folks 

who would balk at paying the full market rate for additional advice. 

Frankly, I’m surprised that Ameriprise or another national-brand 

broker has not tested the market. I’d even consider doing it if I were a 

NAPFA member. 

CEO 

Ellen Turf turfe@napfa.org 

stAFF 

Business Development and Membership 

Nancy Hradsky hradskyn@napfa.org 

Accounting 

Laura Maddalone maddalonel@napfa.org 

Professional Growth and Education 

Robin Gemeinhardt gemeinhardtr@napfa.org 

Public Policy and Advocacy 

Karen Nystrom nystromk@napfa.org 

Executive Assistant to CEO 

Mardi Lee leem@napfa.org 

Membership 

Kristen Vanderploeg vanderploegk@napfa.org 

Membership Assistant 

Cindy Ganze ganzec@napfa.org 

Education Assistant 

Rachel Gusek gusekr@napfa.org 

Administration 

Cassie Cabana cabanac@napfa.org 

Consultants 

Communications 

Benjamin Lewis 301.963.7555 ben@bdlpr.com 

NAPFA Advisor Managing Editor 

Kevin Adler 301.270.2839 kevinadler13@gmail.com 

Publisher and Director of Magazine Operations 

Eric Haines 732.920.4236 ric.haines@erhassoc.com 

NAPFA Advisor Production 

Eric Georgevich ericgeorgevich@gmail.com 

NAPFA Advisor Editorial Assistant 

Christopher Hale cghale@gmail.com 

nApFA Consumer 

education Foundation 

NCEF Coordinator 

Lisa Lenczewski lisal@napfa.org 

The NAPFA Advisor Magazine issue #12 December 2012 is published 

monthly for $85.00 per year by The National Association of Personal Financial 

Advisors, 3250 North Arlington Heights Road, Suite 109, Arlington Heights, IL 

60004. USPS number 024-735. Periodicals Postage Paid at Arlington Heights, 

IL, and additional entry office in Schaumburg and Palatine, IL. Postmaster: Send 

address changes to The NAPFA Advisor Magazine, 3250 North Arlington Heights 

Road, Suite 109, Arlington Heights, IL 60004. 

From time to time, NAPFA Advisor publishes articles on technical subjects. 

NAPFA makes no representation as to the accuracy or timeliness of such advice. 

Submissions are encouraged but will be edited and published at the discretion of 

the editor and/or Board of Directors. All materials should be e-mailed to Kevin 

Adler at kevinadler13@gmail.com. Unsolicited material cannot be returned unless 

accompanied by a stamped, self-addressed envelope. 

NAPFA and NAPFA Advisor do not guarantee or endorse any product or 

service advertised in the NAPFA Advisor. 

nApFA Advisor deCember 2012 3

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nApFA Advisor deCember 2012

table of Contents 

december 2012 vol. 29, issue 12 

NAPFA East Conference. Benefit 

from the wisdom of Warren Buffett, 

John Bogle, and others in our summary 

of major investment sessions from the 

2012 NAPFA East Conference. 

Pages 14-17. 

Profile: Susan John. Our monthly 

Practice Profile looks Susan John’s 

career achievements and influence 

on NAPFA and the financial planning 

industry. Pages 22-25. 

Dementia. Columnist Linda Leitz 

offers tips about judging whether clients 

are losing mental capacity and how 

advisors can intervene. Pages 26-28. 

departments 

Keeping Up with nApFA 8 

eye on... Social Engagement 34 

in the Limelight 36 

Features 

staying in the game 10 

It's About Time 

nApFA east 2012 14 

Investing Ideas and Concerns Emerge 

Financial planning 18 

GAO Report Highlights 

Women’s Retirement Struggles 

practice profile: 22 

Susan John, CFP ® 

insurance planning 30 

Understanding the Tax Impact of 

Employer-Owned Life Insurance 

Permission to Spend 

By Alan Moore, CFP ® , MS 

What if you told your clients that having a financial 

plan can actually give them permission to spend money? 

Many clients are afraid they aren’t saving enough for 

their future. They live in fear that every dollar being spent 

today is a dollar they may need down the road to help 

fund their kids’ college educations, retirement, and health 

care. The reason they have this fear is because they don’t 

know how much they need to set aside for their financial 

goals. When they do spend money, there can be a lot of 

guilt about it. 

Having a financial plan can help them know how 

much they need to save in order to meet their financial 

goals, and gives them permission to spend the rest! 

Based on an article on figuide.com. 

Columns 

message from the editor 3 

Do You Do Groupon? 

Letter from the Chair 6 

’Twas a Month... 

practice made perfect 26 

When Do Clients’ Poor Decisions 

Signal Bigger Problems? 


Lauren Locker, nApFA Chair 

’twas a month... 

nApFA's mission stAtement 

To promote the public interest by advancing the financial 

planning profession and supporting our members consistent with 

our core values. 

Core vALUes 

• Competency: Requiring the highest standards of proficiency 

in the industry. 

• Comprehensive: Practicing a holistic approach to financial 

planning. 

• Compensation: Using a Fee-Only model that facilitates 

objective advice. 

• Client-centered: Committing to a fiduciary relationship that 

ensures the client’s interest is always paramount. 

• Complete Disclosure: Providing an explanation of fees and 

potential conflicts of interest. 

'Twas a month 'til inauguration 

And all through the House 

Not a committee was stirring 

They’d all stopped to grouse 

With Dodd-Frank they had fiddled 

But nary a vote 

Was scheduled for action 

“Why bother?” they’d gloat 

“Let’s leave it for others, 

We’re lame ducks and small 

We needn’t stick heads out 

On this one at all” 

And so it lay dormant 

This significant bill 

We don’t know which way 

Things will go on the Hill 

In the new Congress starting 

When New Year’s does pass 

We’re all left to wonder 

Will FINRA surpass 

The old SEC 

As our fine regulator 

We must call our reps on this 

Sooner than later 

Don’t wait too long 

To express your concern 

If things go awry 

We all stand to burn 

For FINRA can set 

Any fees that they choose 

Small firms and large 

Should react to that news 

So gather your ammo 

Read up and get smart, 

We all need to keep 

This theme close to our heart 

The new folks in Senate 

Chambers can sway 

The whole Congress body 

Into thinking our way 

We don't need SRO powers 

We need bipartisan aids 

The old filibusters 

Must be banished in spades 

As FINRA gets ready 

To charge in and holler 

At NAPFA we gather 

Our most eloquent power 

We lobby and fight 

For the fiduciary stand 

So that client-first service 

Becomes law in this land 

Cringe if you must 

Over rhyme that is lame 

But please pay attention 

To this just the same 

And I will exclaim 

As a new year is in sight 

“FINRA is not for us 

We are up for the fight!” 

vision 

The public recognizes that NAPFA advocates the highest 

standards for personal financial planning and that NAPFA- 

Registered Financial Advisors are the trusted advisors of choice. 

boArd oF direCtors 

Chair 

Lauren Locker, CFP ® 

Little Falls, NJ 

lauren.locker@napfa.org 

CEO 

Ellen Turf 

847.483.5400 x101 

turfe@napfa.org 

Giles Almond, CFP ® , CPA/PFS 

Charlotte, NC 

giles.almond@napfa.org 

Cheryl Costa, CFP ® 

Framingham, MA 

cheryl.costa@napfa.org 

Dr. Raymond Forgue 

Easley, SC 

ray.forgue@napfa.org 

Robert Gerstemeier, CFP ® 

Loveland, OH 

bob.gerstemeier@napfa.org 

Linda Leitz, CFP ® 

Colorado Springs, CO 

linda.leitz@napfa.org 

Mary Malgoire, CFP ® , MBA 

Bethesda, MD 

mary.malgoire@napfa.org 

Carolyn McClanahan, M.D., CFP ® 

Jacksonville, FL 

carolyn.mcclanahan@napfa.org 

Tony Ogorek, Ed.D., CFP ® 

Williamsville, NY 

tony.ogorek@napfa.org 

6 

nApFA Advisor deCember 2012 

Dana Pingenot, CFP ® 

Dallas, TX 

dana.pingenot@napfa.org 

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Keeping Up With NAPFA 

NAPFA Adopts 

CFP® Requirement 

Effective on Jan. 1, 2013, NAPFA 

will make the CFP ® designation the 

only qualifying mark for advisors who 

are applying for new membership as a 

NAPFA-Registered Financial Advisor. 

The decision was made after more than 

two years of discussion and a membership 

comment period conducted in November 

2012, which indicated strong support for 

the new policy. 

“The NAPFA National Board and 

Public Policy Committee recognized that 

our emerging profession has reached 

a point where we must rally around 

a singular professional designation,” 

said NAPFA in a press statement. “Our 

support of the CFP ® designation as the 

standard for financial planning will be a 

catalyst in pushing the recognition of this 

profession forward.” 

Members in good standing who have 

other designations, but not a CFP ® , will be 

grandfathered in to the organization. The 

Board also noted that “the vast majority” 

of members already are CFPs and that 

since 2010, when the issue was first 

raised, new applications for membership 

have come virtually exclusively from 

professionals with CFP designations or 

who are planning to earn a CFP. 

NAPFA Sets Dates for 

Two Conferences in 2013 

In 2013, NAPFA will sponsor two 

major conferences, replacing its past 

programming of one major conference 

in the spring and two or more region 

conferences in the fall. The new structure 

reflects NAPFA’s plan to focus its efforts 

on fewer events with greater impact and 

scope, said Tony Ogorek, a NAPFA board 

member. 

The spring conference will be held 

on May 7-10 in Las Vegas, and the fall 

conference will be held on Oct. 8-11 in 

Philadelphia. 

NAPFA’s Education Committee is 

evaluating how and when to produce 

another virtual conference, building 

on the success of the Forbes-NAPFA 

Advisor iConference, which was held in 

August 2012. 

NAPFA Seeks Nominees 

for 2013 Awards 

NAPFA is now seeking nominations 

for its three awards: Robert J. Underwood 

Distinguished Service Award, NAPFA 

Special Achievement Award, and NAPFA 

Special Membership Award. 

All NAPFA members are eligible 

to nominate candidates by going to 

NAPFA’s website and clicking on the 

link for the awards. An online nomination 

form is available, and the deadline is Jan. 

11, 2013. “It takes only a few minutes 

to make a nomination, and you will be 

showing a colleague how much you value 

his or her input to the organization,” said 

Ellen Turf, NAPFA CEO. 

Last year’s winners were Linda 

Gadkowski (Membership), Brooksley 

Born (NAPFA Special Achievement), 

and Ellen Turf (Underwood Special 

Achievement). This year’s winners will 

be announced at the Spring Conference in 

May in Las Vegas. 

Paul Baumbach Elected 

to Delaware Legislature 

NAPFA member Paul Baumbach 

was elected to the Delaware General 

Assembly on Nov. 6, winning his first 

election with 57.3 percent of the vote. 

Long active in the state’s Democratic 

Party, 

Baumbach 

will represent 

District 23, 

which includes 

a significant part 

of Newark, the 

state’s secondlargest 

city. 

“I’m driven to have an impact in 

the state and in my community,” said 

Baumbach, who has been president of 

Progressive Democrats of Delaware and 

is on the boards of Equality Delaware and 

the Newark Housing Authority. “I have 

passions and skills that I felt were wellsuited 

for the job.” 

Indeed, Baumbach said that he found 

campaigning had some similarities to 

being a financial advisor. “Going doorto-door 

on a campaign and asking people 

what issues matter to them is not that 

different from asking a client about his 

goals,” said Baumbach. “Then, when 

the client or the voter responds, you 

have to be able to think on your feet and 

understand their issues. You have to be a 

great listener, just like an advisor.” 

Delaware’s legislature meets three 

days per week for the first half of each 

year, and one of its key responsibilities is 

passing the state’s annual budget, which 

is first proposed by Delaware’s governor. 

As a new legislator, Baumbach said that 

his input on budget discussions will 

likely be minimal this year, but he hopes 

to utilize his financial skills in that area 

in the future. 

Still, even as a part-time legislator, 

Baumbach will have to scale back to 

80-percent time in the office, or less. 

“I promoted Susan Lehnard in our 

firm to head of financial planning, 

and she will take the lead on some of 

our work,” he said. “Also, I intend 

to do a lot of my constituent work on 

nights and weekends, just like I did my 

campaigning.” 

8 

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Napfa Advisor DECEmber 2012 9

Staying in the Game 

By Richard Sincere 

It's about Time 

I’ve been thinking about time a 

lot lately. Spurred by the passing 

away of a close friend, discussions 

with advisor friends about succession 

planning, and strategically watching 

how some people use time as a 

non-verbal message, it has been an 

interesting exercise. 

One of the first attorneys I worked 

with in my corporate life, Ann, was a 

master at using and manipulating time. 

As a young pup in the corporate world, 

I would rush if someone from outside 

the corporation told me they needed 

something immediately. One day, Ann 

took me aside and told me that making 

someone wait was okay and that it put 

you in a position of power. After that, I 

never really worried if I made someone 

wait. And if they made me wait, that was 

okay, too—whatever floated their boat. 

In the military, the sense of 

obligation to time can be quite the 

opposite. During a boot camp mission, 

you would be physically penalized 

if your group wasn’t at the assigned 

location on time. Many push-ups and 

laps have been performed in the interest 

of promptness. 

Punishment in different forms 

certainly carries over into the corporate 

world. For example, managers use 

nonverbal shaming of late arrivals to 

meetings by not acknowledging that the 

laggards are even in the room. Some of 

my mentors were incredibly talented at 

making a subordinate feel that he or she 

didn’t exist after coming late. I quickly 

learned to be at a meeting first, and the 

corollary was to be sure not to be last 

unless you were the most important 

person in the meeting. 

A twist on manipulating time that 

I recently saw in the corporate world 

may become my new favorite. Whoever 

schedules the meeting announces at the 

last minute (about an hour or two before 

the original meeting time) that it will 

begin 15 to 30 minutes earlier than the 

original time. This causes everyone to 

change their schedules to make sure that 

they’re not last to arrive—unless, of 

course, they decide not to participate in 

the “game.” Then, this could backfire. 

Building the 

Next Gener ation 

While I muse over these short-term, 

political time games, one day you will 

wake up and realize that your personal 

clock is getting shorter. Hopefully, this 

isn’t a result of an illness, but simply 

the realization that there are only so 

many years left that you can work. 

My uncle was an extremely successful 

entrepreneur, and he once told me the 

worst work-related mistake he ever 

made was retiring at 65. But even if you 

push your retirement age out to 70, it 

still isn’t that distant for many of us. 

It seems everyone is talking about 

retirement—their clients’ and their 

own—at every conference and meeting 

I attend. How many years do we have to 

prepare for this inevitability? 

Making someone 

wait is okay, and 

it can put you in a 

position of power. 

After realizing 

that, I never really 

worried if I made 

someone wait. And 

if they made me 

wait, that was okay, 

too—whatever 

floated their boat. 

It also seems to me that the most 

difficult issues are trying to determine: 

1) how each of your employees will 

mature, and 2) the likelihood that one 

of them will be ready to take the helm 

in five to 10 years. This isn’t as hard to 

judge when you have people over 50 

years of age, rather than those only in 

their 20s or 30s who are still developing. 

Much of the development responsibility 

for young proteges falls on your 

shoulders as their employer, manager, 

and mentor. 

One way to develop your staff’s 

talent is to get a better understanding 

of their personalities and strengths. 

Personality testing and analysis can 

10 


Staying in the Game 

be very helpful. Consultant Gayle 

Abbott has worked on those issues 

with one of the boards on which I sit, 

both by conducting sophisticated tests 

and then by providing a deep analysis 

of the results. More importantly, she 

has always been able to evaluate 

whether people will work effectively or 

ineffectively in a particular group. 

Another opportunity for developing 

employees is enrolling the best and 

brightest in targeted courses on 

leadership, organizational behavior, 

communications, etc. I think that 

NAPFA should create a conference that 

teaches those skills in the context of 

an advisory business. I would host it at 

a university, in the same way NAPFA 

held the South Region Conference at 

Emory University for several years. We 

could bring professors from both the 

liberal arts and business school, and 

every subject would be targeted towards 

developing staff. This would be a nice 

change from sessions about trying to 

maximize the earnings ratio of the firm. 

These are just two examples of 

how we can re-think our use of time. 

Once someone takes the ball and starts 

developing conferences to help groom 

our staff for succeeding us in managing 

our businesses, then we can move on 

to the next fun thing: figuring out what 

we’re going to do when we finally grow 

out of our firm. We’ll have to find new 

things that keep us mentally engaged 

and physically in shape, but that’s an 

exciting challenge. Yes, the clock is 

ticking, but our lives should always be a 

race towards fulfillment. 

Richard Sincere is chairman and 

CEO of Sincere & Co., LLC, a NAPFA 

Resource Partner company based in 

Chicago. He can be contacted by phone 

at 847.905.0225, or by e-mail at rs@ 

sincereco.com. His company’s website is 

www.sincereco.com. 

NAPFA Continuing Education Events: 

JANUARY 2013 

Webinars 

Cutting Edge Webinar: 

Dynamic Asset Allocation: A Key Element 

of Portfolio Risk Management 

NAPFA University 

Investing in a Rebound 

Presented by NAPFA-Registered Financial 

Advisor Scott Leonard 

Dean, School of Investments 

June 

Investments 

Alternative Investments in an IRA. The 

Potential & Pitfalls of Land, Loans, LLCs & 

Llamas in a Self-Directed Retirement Plan 

Presented by: Jack M. Callahan, JD, CFP®, 

Family Financial Fraud: 

Detection and Prevention 

Presented by Peggy Tracy, CFP ® , CDFA, CFE 

Member fee: $19. Non-members: $49. 

September 

Ethics Training 


Advisors Linda Gadkowski and Lauren Lindsay 

This session fulfills NAPFA’s two-hour 

requirement in Ethics of Financial Planning, 

November 


Communication and Counseling 


Advisor Peg Downey, Dean, School of 

Communication and Counseling 

December 

Socially Responsible Investing 


NAPFA Genesis Webinar: 

Going Boldly Where Most Don’t 

Wednesday, January 16, 2013, at 3:00 p.m. ET 

Presented by Amy Florian, CEO, Corgenius 

009 NAPFA Thursday, Janaury Cutting 31, 2012 at 11:00 a.m. Edge CST Webinars* 

Presented by Jerry Miccolis, Chief Investment Officer of Brinton Eaton 

Amy Florian, CEO of Corgenius, offers her insights 

ake the most of your educational opportunities by registering for NAPFA’s Cutting Edge webinars. These seminars 

re a convenient way to get valuable information about how to run your practice and serve your clients. You will about how young advisors can establish credibility and 

Strategic asset allocation and disciplined rebalancing remain the 

eceive pre-session information that you can follow online during the course, and there’s always time for Q&A at trust the with clients, especially those a generation or two 

nd of the presentation. cornerstones Plus the webinars of sound are long-term an easy way investing. to fi ll your continuing But Jerry education Miccolis, requirements. 

ahead. Florian will explain why this requires knowing 

April chief investment officer July for Brinton Eaton, believes that the September 

about more than finance and investing—it requires 

Retirement Planningfinancial advisory Marketing industry and has Practice learned Management from events Estate of recent Planning years 

Presented by Mitch Politzer, President and New Media in Your Financial 

Creating the Future Care Plan for being Family comfortable with tough discussions that include 

CEO, First Ameritus Life that Insurance this foundation Corp. Planning needs Practice to be fortified with more Members proactive with risk Special Needs 

Effective retirement income planning. Presented by Benjamin Lewis, president, Perception, Presented by Mary Anne Ehlert of Protected 

issues like life transitions, divorce, or death. 

management. He believes that Dynamic Asset Allocation is a key 

Helping your client financially and 

Inc., and PR representative for NAPFA 

Tomorrows 

psychologically in a volatile part market. of the solution. Webinar registrants will learn: 

• What is Dynamic August 

Free for NAPFA Genesis members. 

Asset Allocation? 

May 

October 


Insurance and Risk Management NAPFA Member Fee: $19. 

Estate Planning • What are Homeowners the key Insurance external - and internal Dynamic Asset 

Long Term Care Planning – Current 

Afluenza & Philanthropy 

Allocation Property investment and Casualty 

Others: $49. 

metrics and signals? Trends and Laws 

Presented by Rod Zeeb, COO, 


Presented by MAGA Ltd., a NAFPA Resource 

The Heritage Institute • How can Advisor advisors Roseann implement Bove, this strategy? 

Partner 

Dean, School of Risk Management 

Go to the Virtual Learning link under the Learning 

• And more… 

Center on NAPFA’s website to register for these great 

events. 


Invest wisely. 

Performance Summary, cLaSS r SHareS (Sirrx) 

Sierra core retirement fund from incePtion 12/24/07 to 10/31/12 

Successful portfolio management involves both profiting from sustained uptrends — the past 

three years have all been part of the current rising cycle — and limiting drawdown during the 

adverse part of the cycle — which Sierra has also done very well for many years. 

Year-to-Date 

One Year 

As of 9/30/2012 

Latest Four Years Since Inception 12/24/2007 

Cumulative* Annualized Cumulative* Annualized 

Sierra core retirement 

fund class r (Sirrx) 

+5.84% +6.04% +54.10% +11.42% +49.28% +8.77% 

S & P 500* +16.44% +30.20% +34.77% +7.80% +8.20% +1.43% 

“Cumulative” performance from inception is the total increase in value of an investment in the Class R shares assuming 

reinvestment of dividends and capital gains distributions. The S&P 500 Index, a registered trademark of McGraw-Hill 

Co., Inc., is a market-capitalization-weighted index of 500 widely-held common stocks. Data here for the S&P includes 

dividends. 

The performance data quoted here represents past performance for Class R shares (symbol SIRRX), and are net of the total annual 

operating expenses of the Class R shares (see below). For performance numbers current to the most recent month end, please 

call toll-free 855-556-1295 or visit our website, SierraMutualFunds.com. Current performance may be lower or higher than the 

performance data quoted above. Past performance is no guarantee of future results. The investment return and principal value of an 

investment in the Fund will fluctuate, so that investors’ shares, when redeemed, may be worth more or less than their original cost. 

The total annual operating expenses including expenses of the underlying funds (estimated at 0.69% per year) are 2.34% for Class 

A and Class I, 2.49% for Class A1 and Class I1, 3.09% for Class C, and 2.09% for Class R. Please review the Fund’s prospectus for 

more information regarding the Fund’s fees and expenses. 

12 


aSSet aLLocation aS of octoBer 31, 2012* 

High yield corporate 

Bond funds 

10% 

other 

Low-Volatility 

funds 

4% 

temporary 

Havens** 

9% 

other 

Bond funds 

53% 

municipal Bond 

funds 

24% 

*NOTE: Holdings can change at any time without notice. **Money Market & ultra short bond funds. 

The top ten holdings of the Sierra Core Fund as of the date above is among the extensive information included in a four-page Fact Sheet, which is 

updated at least quarterly and can be viewed and printed from our website, SierraMutualFunds.com 

Performance By Quarter, cLaSS r SHareS (Sirrx) 

Year Q1 Q2 Q3 Q4 

Calendar 

Year 

S&P 500 

w/divs 

2008 -0.88% +1.27% -3.51% +0.34% -2.82% -37.02% 

2009 -2.01% +20.12% +9.14% +1.82% +30.81% +26.49% 

2010 +3.61% +0.33% +3.89% +0.07% +8.07% +14.91% 

2011 +2.34% +0.88% -0.69% +0.18% +2.63% +1.97% 

2012 +1.94% +1.14% +2.57% 

The Sierra Core Fund pays a quarterly dividend. Shares are available through TD Ameritrade, Charles Schwab & Co. Inc., Fidelity, Pershing and directly 

from the Fund. 

The Fund indirectly bears the investment management fees and expenses of the underlying funds in addition to the investment management fees 

and expenses of the Fund – all of which however are fully reflected in the above performance information. In some instances it may be less expensive 

for an investor to invest in the underlying funds directly. There is also a risk that investment advisers of those underlying funds may make investment 

decisions that are detrimental to the performance of the Fund. Investments in underlying funds that own small- and mid-capitalization companies 

may be more vulnerable than larger, more established organizations to adverse business or economic developments. Investments in underlying funds 

that invest in foreign equity and debt securities could subject the Fund to greater risks including, currency fluctuation, economic conditions, and 

different governmental and accounting standards. 

Investors should carefully consider the investment objectives, risks, charges, and expenses of the Sierra Core Retirement Fund. This 

and other information about the Fund is contained in the prospectus and should be read carefully before investing. The prospectus 

can be obtained on our website, SierraMutualFunds.com, or by calling toll free 1-855-556-1295. The Sierra Core Retirement Fund is 

distributed by Northern Lights Distributors, LLC, Member FINRA. 

1803-NLD-11/7/2012 


East Conference Review 

By Kevin Adler 

Investing Ideas and Concerns 

Emerge at NAPFA East Conference 

Despite some signs of optimism, 

advisors should remain very 

cautious about the investment 

environment in the U.S. and the 

world, said speakers at the NAPFA 

East Conference in Baltimore in 

early November. The weak economic 

recovery has left the experts pessimistic 

about when market returns will again 

consistently reach long-term historical 

averages. 

Warren Buffett’s Way 

Warren Buffett did not speak at 

NAPFA’s conference, but his biographer, 

Alice Schroeder, gave a keynote 

presentation in which she explained some 

of his underlying investment beliefs. 

Schroeder, a Wall Street analyst who 

became an award-winning financial 

journalist, described Buffett as the most 

intensely focused person she has met, 

and able to use his intensity to discern 

trends ahead of the crowd. “Warren 

is opportunistic…not wanting to be 

hemmed in by the economy,” she said, 

in contrast to most investors who move 

with the tides of economic growth and 

contraction. 

A prime example of Buffett’s 

creative thinking is that he thinks about 

cash differently than many investment 

managers. “Most money managers 

are under pressure not to hold cash, 

especially when it has very low or 

even negative returns,” Schroeder said. 

“Warren likes cash. He views it as 

holding a call option on every asset class, 

with no expiration date and any strike 

price. It gives him ultimate choice in his 

investments, and the cost of holding that 

call option right now is very low.” 

With flexibility to invest his cash 

when he sees an opportunity, Buffett can 

utilize his judgment about long-range 

trends to make major investments. He 

“Most money 

managers are under 

pressure not to 

hold cash, especially 

when it has very low 

or even negative 

returns. Warren 

Buffett likes cash. He 

views it as holding 

a call option on 

every asset class, 

with no expiration 

date and any strike 

price. It gives him 

ultimate choice in his 

investments, and the 

cost of holding that 

call option right 

now is very low.” 

-Alice Schroeder 

seems to have an uncanny ability to 

“recognize the dominant economic reality 

of the times, and to get there first,” said 

Schroeder. For example, he invested 

heavily in media companies in the 1970s 

and financial services companies in the 

1980s. 

Another Buffett principle is that, 

despite his willingness to go against the 

consensus in his investments, he is very 

aware of risk. According to Schroeder, 

he has long been a proponent of looking 

at risk as the loss of capital, rather than 

as the volatility of an investment. That’s 

a distinction that few money managers 

understood until the recession began in 

2008. “Warren looks at risk as having 

a cumulative property. He believes 

that the 95-percent probability of 

something going right is not the same as 

100-percent certainty. To put it another 

way, eventually that 5-percent ‘bad’ event 

will happen,” Schroeder said. Given his 

perspective, Buffett believes an investor 

should not “bet” more than he is willing 

to lose if any of the negative events 

occur, rather than betting that none of the 

highly improbable events will occur. 

Using the insights she has gleaned 

from her years of conversations with 

Buffett, Schroeder wrapped up with her 

perspective on the U.S. economy and 

opportunities that exist for investors: 

• Risk management. “Risk 

management is the great growth 

industry of the 21st century,” she 

said. “Risk management will grow 

faster than risk.” She said that risk 

management is being built into 

everything, from the use of credit 

rating data on individuals to the rise 

in temporary staffing agencies that 

reduce an employer’s risk of having 

too many employees. 

• Technology. The computer 

revolution is far from over, and 

14 


Notes: Sales loads not included. 

Source: Strategic Insight SimFund, Vanguard 10/23/2012 


7 

Schroeder said that economists 

“underrate” the impact of emergent 

technologies. She cited near-term 

prospects for digital printing and 

artificial intelligence, and generally 

she suggested this mantra: “Go long 

on any business that does not rely 

on physics, and go short on stuff 

and places that sell stuff.” 

• Services. In addition to going 

short on physical goods, 

Schroeder suggested going short 

on services because technology 

is commoditizing many jobs that 

previously were thought to need 

steady amounts of human input. 

Bogle Sounds Alarms 

Like Warren Buffett, Vanguard 

founder John Bogle also believes in 

minimizing investment risk. But the 

outspoken leader of the low-cost, indexinvesting 

revolution does not believe 

that individual investors can minimize 

their risk through careful selection of 

individual stocks or even market sectors. 

By acting on his beliefs, he has built his 

career and a giant company, as well as 

helped to support the growth of Fee-Only 

advisors. 

John Bogle 

on Fiduciary Duty 

John Bogle, founder 

of Vanguard, believes 

that investment fees are 

inextricably linked to the 

fiduciary duty to clients held 

by providers of financial 

services. He explained 

to the audience at the NAPFA East 

Conference that, in his opinion, it’s a simple 

mathematical calculation: Every dollar the 

provider receives is a dollar the client does 

not get. 

“How are the rewards of investing 

divided between the providers of financial 

services and their clients who put up their 

capital?” he asked. “Because for investors 

as a group, gross returns in the financial 

markets, minus the costs of financial service 

providers, equals the net returns that are 

actually delivered to investors.” 

$ billions 

Equity Fund Cash Flow Since 2007 

Index funds have taken in over $600 billion; 

active funds have lost almost $300 billion 

$ 800 

600 

400 

200 

0 

-200 

-400 

Index Funds 

Active Funds 

140 136 

95 

-209 

As feisty as ever, Bogle used his 

luncheon address at the conference to 

cement his relationship with fiduciary 

advisors and to reiterate the justification 

for Vanguard-style passive investing. 

“I’ve always believed that Vanguard was 

the natural partner and ally for nearly 

all RIAs,” said the 1999 recipient of 

NAPFA’s Special Achievement Award. 

Bogle observed that using a lowcost 

Vanguard index fund, plus paying 

the typical 1 percent AUM fee of an 

advisor, basically matches the nationalaverage 

mutual fund fee of 1.3 percent. 

Essentially, the client of the advisor is 

getting an advisor’s services for the same 

price as purchasing an active fund—“and 

there’s no point I can see in the client 

paying that higher mutual fund fee,” he 

said. 

The importance of fees is magnified 

in today’s low-yield environment, and 

Bogle predicted that yields are not likely 

to rebound soon. “Historic returns are 

irrelevant. Put away your Monte Carlo 

[investment projections], or at least 

adjust them for today’s yields,” he said. 

“Returns are half of the historic averages 

of the last 50 years.” 

Bogle backed his outlook with an 

explanation of how the equity price-toearnings 

(P/E) ratio created the outsize 

83 108 93 98 

-5 -7 

-86 -63 

659 

-275 

2007 2008 2009 2010 2011 YTD 2012 2007-12 

Source: Vanguard 

returns of the 1990s. During the ’90s, the 

P/E ratio surged well above its historic 

average, and it carried stock prices with 

it. Now that it’s back in the normal range, 

it will not provide any fuel for growth in 

equity values, so that growth will be tied 

to earnings growth and dividend yield. 

Here’s his math for the next decade: 

Assume a 7-percent equity growth 

annually, based on 5-percent earnings 

growth and 2-percent dividends. Assume 

a 3-percent bond yield. An investor with 

a 60-40 stock-bond portfolio would 

receive a 5.5-percent nominal return. 

Then, subtract inflation, taxes, and 

investment fees, and Bogle said the result 

“is not enough for income-starved clients. 

They need to reduce their spending, use 

junk bonds for higher yields, raise their 

ratio of stocks, or borrow against their 

house and invest the money. These are 

not good choices.” 

This is why index funds have taken 

market share from active funds in the last 

five years (see graph). 

Given the low yields, investors and 

advisors are tempted to look for the 

investment manager who can outperform 

the market. But that’s a fool’s errand, 

said Bogle. He observed that half of the 

mutual funds operating today will fail in 

the next decade. Of those that survive, 

7 


east Conference review 

they will, on average, switch managers 

every five years. “So how can you 

possibly pick the successful managers 

time after time?” he asked. 

Keeping fees low is a better solution, 

he said. Even ETFs, which many advisors 

see as the low-cost solution for their 

clients, came in for Bogle’s criticism 

(and even though Vanguard has become 

a significant player in that market). From 

his perspective, ETF fees are still too 

high, and the loyalties of ETF sponsors 

are mixed. Speaking of the CEO of one 

leading ETF provider that competes with 

Vanguard, Bogle said, “He has a fiduciary 

duty to shareholders to maximize his 

profit, but he also has a fiduciary duty to 

his clients. He’s on the horns of a nasty 

dilemma.” 

Social Investing 

With social media on the minds 

of most advisors for marketing and 

communications purposes, Hardeep 

Walia, CEO of Motif Investing, offered 

his firm’s vision of how social media 

could affect investing. Investors can 

communicate with each other with 

unprecedented ease, and “social 

investors” enjoy the give-and-take of 

debating their best investing ideas with 

others. These investors do not rely solely 

on professional managers and might be 

the types of clients who come to Fee- 

Only advisors for validation of their 

ideas, he said. 

Motif Investing has launched itself 

into the world of social investors by 

creating a platform for purchasing a 

“motif,” which is a portfolio of up to 30 

individual stocks. They can be arranged 

around themes as diverse as cleanup 

and recovery from Hurricane Sandy, 

the housing rental industry, or women 

CEOs. “Motifs are thematically weighted 

portfolios…that enable individuals to 

share their expertise about the world,” 

he said. “They are a way to analyze and 

capture the wisdom of the crowd.” 

Motif Investing offers nearly 

100 portfolios today, and it’s adding 

new portfolios on a regular basis. It 

developed some of them, but it also 

considers motifs proposed by outsiders. 

At least one NAPFA member, Tom 

Nowak, CFP ® , has created a motif. 

Nowak’s motif is based on the model 

presented in his book that was published 

earlier this year, Low-Fee Socially 

Responsible Investing (see the May 2012 

Advisor for a review of the book). 

Motifs even share Bogle’s vision 

of a low-cost investment future, even 

though motifs represent a more active 

management strategy. “It’s a low-cost, 

disruptive model,” said Walia. “You 

can buy a motif today for $9.95, but we 

foresee that pricing will go to zero, along 

with the rest of stock trades some day.” 

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mergers and acquIsItIons sPecIalIsts 

16 



Assessing Investment Counterparty Risk 

By Kevin Adler, NAPFA Editor 

As if advisors don’t have enough to worry about, NAPFA 

member John Henry Low made a presentation at the NAPFA 

East Conference highlighting a risk that most advisors don’t 

even realize exist: Are the custodians of your client assets really 

as safe as they seem? Low’s presentation, “Counter-Party Risk: 

The Biggest Risk You Didn’t Know You Were Taking with 

Your Client’s Money,” raised more than a few eyebrows. 

Low began his talk by reviewing the circumstances of a 

little-remembered Friday in 1974 when Bankhaus I. D. Herstatt, 

a small private bank in Germany, almost brought the world’s 

financial system to its knees. After regulators closed the bank’s 

doors on a Friday afternoon for an enforced shutdown, the bank 

had outstanding foreign exchange transaction commitments 

with banks around the world that could no longer be settled 

in New York. If not for a frantic weekend of transoceanic 

negotiations by the Federal Reserve and some of the biggest 

banks in the world, the financial markets might not have been 

able to open on Monday, said Low. 

Today, safeguards are in place to avoid a recurrence of that 

specific problem, but unexpected new problems will emerge, 

he predicted. Of significant interest to advisors is the fact that 

broker/dealers, which act as custodians for many advisors, are 

far from foolproof. More than 300 B/Ds failed or merged under 

financial duress during the mid-1970s alone, with plenty more 

since, and investors lost their life savings in some cases, he 

said. In other cases, clients have had to wait six or seven years 

for their settlements, sometimes at 20 cents or 30 cents on the 

dollar. “Could your clients wait that long for access to their 

retirement funds?” he asked. 

Perhaps surprisingly, full-service B/Ds are probably riskier 

than discount B/Ds because they are engaged in numerous lines 

of riskier business beyond being custodians (such as trading for 

their own accounts or creating financial products), so there’s a 

chance that their other business lines can drag down the entire 

firm, including the custodial side, he said. Even though they 

are supposed to keep client custodial assets in safer “segregated 

accounts,” custodians often are allowed to lend against client 

accounts. “If you check the margin box or the check-writing 

box on an account application, you are allowing your broker to 

take your account out of their ‘segregated account’ and lend out 

those assets,” he said. 

Unfortunately, those loans and investments can go bad. 

An extreme example is MF Global, which had a balance 

sheet of about $30 billion in liabilities, but only $8 billion in 

segregated custodial accounts, when it went bankrupt in 2012. 

Those “safe, segregated custodian accounts” were allegedly 

“borrowed” and used by MF Global to make profits for its 

own account. “Predictably, those bets went wrong, and even 

the segregated account custodial funds went missing and are 

now tied up in bankruptcy,” 

Low said. 

“Breaking the buck” in 

a money market account is 

another example of what can 

and has gone wrong. When 

Lehman Brothers collapsed 

in 2008, many money market 

funds found themselves holding John Henry Low 

now-worthless Lehman Brothers 

commercial paper. Lehman’s The Reserve Primary Money 

Market Fund, the oldest and one of the country’s top-ranked 

money market funds, had quietly diverged from its stated 

strategy of not investing in commercial paper. In early 2006, 

the Reserve Fund’s SEC filings confirmed that position, “but 

just two months later,” said Low, “they had 5.7 percent in 

commercial paper and kept adding to it in order to increase 

yield. It caused a huge cataclysm.” In the end, the Reserve Fund 

broke the buck and let its money market fund value fall below 

$1.00 per share. Low contrasted that event with another money 

market fund that also was caught in the Lehman collapse, but 

whose executives publicly stated that they would stand behind 

their money market funds and maintain their value at $1.00. 

“Who would your rather work with?” he asked. 

Safety Solutions 

What’s the solution? First, due diligence. Low 

recommended looking at the custodian’s or other counterparty’s 

regulatory filings, in particular the Focus Report and 

other financial reports. The Focus Report carries a great deal 

of information about the full scope of the firm’s business, so 

an advisor can judge whether custodian accounts might be 

exposed by a firm’s other activities. 

Second, Low favors using a custodian for whom the 

custody of client assets is its main business. Within that 

category, he suggested using trust companies to custody assets 

because: 1) their custody accounts are completely segregated 

from the company’s other lines of business, and 2) those 

accounts are not part of the creditor pool should the trust 

company fail (unlike at a B/D). 

Third, consider the corporate culture of the custodian, 

keeping an eye on how the vendor resolves the inevitable 

mistakes that occur. 

And fourth, don’t mistake SIPC (Securities Investor 

Protection Corporation) coverage for being a safety net like 

the FDIC. SIPC coverage has limits and can take many years 

to provide payouts to clients who are harmed. “Perhaps more 

importantly, work with first-class counter parties, where you 

won’t have to rely on insurance at all,” he said. 


Financial Planning 

By Bridget McCrea 

GAO Report Highlights 

Women’s Retirement Struggles 

Elderly women comprise a growing 

portion of the U.S. population and 

have historically been at greater 

risk of living in poverty than elderly men. 

Several factors contribute to the higher 

rate of poverty among elderly women, 

such as their tendencies to have lower 

lifetime earnings, to take time out of the 

workforce to care for family members, and 

to outlive their spouses. Outside factors 

like economic downturns and changes 

in employer retirement plans also play a 

role in the financial insecurity of older 

American women. 

While none of this would be 

surprising to financial advisors, solving 

the problem is an immense challenge. 

Even advisors working with wealthier 

retired women or younger women need to 

speak with their clients about these issues. 

In light of these circumstances, the 

U.S. Government Accountability Office 

(GAO) was asked to examine the following 

four key areas: how women’s access to 

and participation in employer-sponsored 

retirement plans compares to men’s and 

how these plans have changed over time; 

how women’s retirement income compares 

to men’s and how the composition of 

their income—the proportion of income 

coming from different sources—changed 

with economic conditions and trends in 

pension design; how later-in-life events 

affect women’s retirement income security; 

and what policy options are available to 

help increase women’s retirement income 

security. 

For financial advisors, the GAO study 

shows how challenging the circumstances 

are for many women in retirement and 

provides additional evidence that early 

planning and aggressive saving are essential 

to meeting retirement-income needs. 

Pinpointing Important 

retirement Trends 

It’s well-known that women outlive 

men. What’s less obvious is the way that 

effect shows up in the upper ranges of the 

age scale and the financial implications 

of longevity for women. Today, of those 

individuals aged 65 and older, one-sixth 

of American women and one-tenth of men 

are 85 or older, and this share is projected 

to grow to almost one-quarter of women 

and one-fifth of men by 2050. For these 

people, the threat of 

poverty in old age is most 

severe as they deplete 

their savings and have 

to rely solely on Social 

Security for income. 

Although the income 

composition for women 

65 and older did not vary 

greatly over the period 

examined by the GAO 

(1998 to 2009), women 

continued to have less 

retirement income on 

average and live in higher 

rates of poverty than men 

in that age group. The 

GAO found that women, 

especially widows and 

en and Men Age 65 and Over Did Not Fluctuate Greatly Over Time 

f Household Change Income in Sources for Women of Household and Men Age Income 65 and for Over Women Did Not Fluctuate Greatly Over Time 

those 80 and older, depended on Social 

Security benefits for a larger percentage 

of their income than did men (see graph). 

For example, in 2010, 16 percent of 

women 65 and older depended solely on 

Social Security for income, compared to 

12 percent of men. Moreover, women’s 

median income was approximately 25 

percent lower than men’s over the last 

decade, and the poverty rate for women in 

this age group was nearly two times higher 

than men’s in 2010. 

Retirement income also is dependent 

on savings in defined contribution plans, as 

most employers have phased out definedbenefit 

pension-style plans. Women born in 

the baby boom generation are much more 

likely to be in the workforce than women 

in preceding generations, so their access to 

and participation in employer-sponsored 

retirement plans has increased. Women’s 

participation rates in defined-contribution 

plans increased slightly between 1998 

and 2009, while men’s participation 

fell, thereby narrowing the participation 

difference between men and women to 

1 percentage point. However, women 

contributed to their plans at lower levels 

than men. 

Overall, the composition of women’s 

income varied only slightly during the 

time period of the study. This is a good 

news/bad news situation. Women’s main 

income sources (Social Security and 

defined-benefit retirement plans) were 

shielded from fluctuations in the stock 

market, and the share of household income 

women received from earnings increased 

over the period. However, their personal 

savings for retirement lagged behind 

that of men, and their share of household 

income was consistently lower than men’s. 

Race and ethnicity also come into 

play when assessing women’s retirement 

income. While the proportion of working 

women with an employer that offered 

a defined-contribution plan increased 

or men and women include spousal income. The category for income from defined 

Notes: Estimates for men and women include spousal income. The category for income from defined 

ns reflects total household distributions from IRAs, as well as 401(k) pension plans 

contribution 18 

contribution 

pension Napfa plans. Advisor pensions reflects 

Nonregular (lump DECember total household 

sum) withdrawals 2012 distributions from IRAs, as well as 401(k) pension plans 

from IRA and 

and similar defined contribution pension plans. Nonregular (lump sum) withdrawals from IRA and 

ot included. The “other” category includes income from cash public assistance and 

401(k) plans are not included. The “other” category includes income from cash public assistance and 

cluding interest, dividends, rent and royalties. Percentages may not add to 100%


Figure 9: Differences in the Figure Composition 9: Differences of Household in the Composition Income for of Women Household and Men Income Age for 65 Women and Over, and by Men Marital Age Status, 65 and 2010 Over, by Marital S 

in the decade prior to 2009, it varied by decline in assets, but Sources of Household Income for Women, by Marital Status, 2010 

racial and ethnic groups. White and black their income fell by 

women were the most likely to work for 13 percent. 

an employer that offered a plan, while 

Hispanic women were the least likely. 

(Individuals in the white, black, and Asian 

racial and ethnic categories are non- 

Hispanic.) Interestingly, with only a few 

exceptions (i.e., whites in 1998 and Asians 

in 2003 and 2009), the proportion of 

women working for an employer offering 

a plan was equal to or higher than that of 

men of the same race. 

Searching 

for Solutions 

According to 

the GAO, a range 

of existing policy 

options could 

address some of 

the income-security 

challenges women 

face in retirement. 

The Impact of Life Changes 

For women approaching retirement 

or who are already retired, income can 

be severely affected if they become 

divorced, widowed, or unemployed. 

Moreover, divorce and widowhood had 

more pronounced effects for women than 

for men. For example, women’s household 

income, on average, fell by 41 percent 

For example, 

increasing Social 

Security benefits 

for widows could 

provide additional 

income for women 

who have few 

options to increase 

their retirement 

with divorce, almost twice the size of savings. However, 

Notes: In the category for married Notes: individuals, In the category estimates for for married men and individuals, women estimates include spousal for men income. and women include spo 

the decline that men experienced. For The increasing category for benefits income from would defined also increase costs women may not be as financially literate 

The category contribution for income pensions from reflects defined total contribution household pensions distributions reflects from total household distr 

widowhood, women’s household income IRAs, to as the well Social as 401(k) Security and similar program IRAs, defined as and well contribution have as 401(k) and pension as similar men, plans. defined hindering Nonregular contribution them (lump pension from sum) taking plans. full Nonregular (lump 

fell by 37 percent, while men’s income 

withdrawals 

implications 

are not 

for 

included. 

its long-term 

The withdrawals “other” 

solvency. 

category are not included. includes 

advantage 

income The “other” cash 

of category public 

new options. 

assistance includes income and property cash public assistan 

income including interest, dividends, income rent including and royalties. interest, Percentages dividends, rent may and not royalties. add to 100% Percentages due to may not add to 100 

declined by only 22 percent (see graph). rounding. GAO Percentage also considered estimates the expansion Experts also identified a set of policy 

rounding. of the income Percentage shares estimates from Social of the Security income have shares 95 percent from Social confidence Security have 95 perc 

Unemployment (defined as being out intervals of existing that are within tax incentives +/-2, +/-3, intervals +/-4, for individuals 

+/-10 that are and within +/-6 percent +/-2, options +/-3, of +/-4, the that estimate +/-10 would and itself offer +/-6 for percent married, new opportunities 

of widowed, the estimate itself for m 

of work and actively looking for a job) had 

divorced, 

to save 

separated 

for retirement 

and never 

during divorced, married 

their 

individuals separated respectively. and never to accumulate married Percentage individuals earnings 

estimates respectively. credits 

of the income 

for Percentage estimates o 

shares from earnings have 95 percent shares from confidence earnings intervals have 95 that percent are within confidence +/-2, +/-2, intervals +/-3, +/-11 that are and within +/-6 +/-2, +/-2, +/-3 

negative consequences on total household percent working of the estimate years. These itself for options could help Social Security. These could enhance 

percent married, of widowed, the estimate divorced, itself for separated married, and widowed, never divorced, married individuals separated and never marrie 

assets and income, although the effects were respectively. lower- and Percentage moderate-income estimates respectively. of the workers, income Percentage shares estimates from the retirement defined of the benefit income security plans shares have of workers from 95 percent defined who benefit plans hav 

comparable for women and men. Both saw 

confidence 

as well 

intervals 

as those 

that 

who 

are within 

take confidence time 

+/-2, +/-3, 

out intervals +/-3, 

of the 

+/-7 that and are experience within +/-5 percent +/-2, a +/-3, of 

period 

the +/-3, estimate 

of +/-7 unemployment and itself +/-5 for percent or of the estimate 

married, widowed, divorced, separated married, and widowed, never divorced, married individuals separated respectively. and never married Percentage individuals respectively. Perce 

their assets and income decline by about 7 estimates workforce of the income to care shares for family from defined members. contribution plans who have take 95 time percent out of confidence the workforce intervals to care 

estimates of the income shares from defined contribution plans have 95 percent confide 

to 9 percent. The effects on income were that Since are within women +/- 2 percent have lower of the that estimate earnings are within itself +/- than 2 for percent all marital for of the family status estimate categories. members. itself for all marital status categories. 

most acute for households where at least one men, on average, and are more likely to Other policy options could either 

member of the household was 65 or older. As take shown time in out figure of the 10, workforce among to different care for age expand groups, access women to retirement age savings 80 and in 

As shown in figure 10, among different age groups, women ag 

For these households, men’s assets fell by 14 

over 

family 

received 

members, 

the 

women 

highest 

may 

share 

especially 

of their income 

defined contribution 

from Social 

plans 

Security 

and IRAs 

over received highest share of their income (61 from Social Se 

percent and their income fell by 12 percent. benefit from these options. However, or strengthen spousal protections for 

percent). In fact, about 20 percent of them depended on Social Security 

Women did not experience a significant pension experts are concerned percent). that In fact, about retirement 20 percent savings. of them depended on Socia 

for their sole source of for income. their sole Men source in the of youngest age category (65 to 

To income. retirement Men security in the experts, youngest age categ 

69) received a higher 69) share received of their a income higher the share from GAO’s earnings of findings their income paint (31 percent) a familiar, from earnings if (31 

ING U.S. Survey Shows Women-Men relative to other groups, relative while to individuals other groups, disconcerting, in the while oldest individuals picture. age categories Although in the increases oldest age cate 

Disparity in Retirement Savings received the smallest received share of income the smallest from in women’s share earnings, of labor income likely force reflecting from and retirement earnings, the likely ref 

Other recent surveys back up the findings of declining the Governmental ability to Accountability work declining at older Office ability ages. that to work plan participation at older ages. have led to a marginal 

women are less financially prepared for retirement than are men. 

The ING U.S. Retirement Research Institute released a report in May 2012, in which 

more than 4,000 full-time working adults living in households with incomes of $40,000 or 

more were asked about their retirement savings. Page The study, 20 Retirement Revealed, Page 20 illustrated 

the point that women are less financially secure as they reach retirement. (To view the report, 

visit ing.us/rri/ing-studies/what-about-women.) 

According to the study, among those who have savings in or outside of an employersponsored 

retirement plan, women have $108,000 in total savings, on average. Men have 

$149,000, on average. For women with children at home, retirement savings is only $88,000. 

improvement in women’s prospects for 

achieving a more secure retirement, 

the GAO’s report also highlights the 

substantial GAO-12-699 risks Women’s women Retirement continue Security to face 

in accumulating adequate retirement 

income. Nor should it be forgotten that 

retirement security in America continues 

to be a national dilemma that transcends 

gender differences. 

GAO-12-699 Women’s Retir 



marketfield 

asset management 

Italy Consumer Confidence 

Authored November 27, 2012 by Michael Shaoul, Ph.D., Chairman of Marketfield Asset Management, 

Advisor to the Mainstay Marketfield Fund 

It is one of our more cherished beliefs that the majority of interesting 

investment cycles commence against a backdrop of despair, 

in large part because the path to this emotional state involves the 

wholesale liquidation of economically sensitive assets such as 

equities. We therefore take perverse encouragement from Italy’s 

Consumer Confidence poll for November, which showed 

confidence at an all time low of 84.8 (data commences in 1996). 

positive tone to it, and the local equity market has rallied strongly 

since the summer collapse, moving back into positive territory for 

2012 (the FTSEMIB index is up 3% YTD at the time of writing). To 

the extent that the drop in GDP is a reflection of tighter fiscal spending, 

rather than a wholesale collapse of consumer and industrial 

demand, the equity market should continue to make decent if 

volatile progress in the months ahead. ■ 

As we have explained before, it is not that things look particularly 

rosy in Italy, but as far as the corporate economy is concerned, they 

look far better than they did back in 2008. There is a growing 

disconnect between the crisis of government and the reform of 

fiscal policy on the one hand with that of actual corporate activity 

on the other. Indeed, even though the local economy has slipped 

back into recession, the last earnings period had a generally 

Source: Bloomberg 

20 


Michael Shaoul is Chairman of Marketfield Asset Management, 

Adviser to the Mainstay Marketfield Fund (MFLDX/MFADX). He also 

serves as Chief Executive Officer of Oscar Gruss and Son 

Incorporated, a position he has held since December 2001. He 

joined Oscar Gruss in 1996 as Chief Operating Officer. Between 

1992 and 1996, Mr. Shaoul ran Park Square Associates, 

a Manhattan-based real estate investment and management company. 

He was awarded a Ph.D. in Accounting and Finance in 1992 from 

Manchester University (UK). Mr. Shaoul has written articles on 

behalf of Barron’s and has been regularly quoted in The Wall Street 

Journal and Dow Jones Newswires regarding his opinions on the 

investment markets. 

To subscribe to the Mainstay Marketfield Gold Edition, a daily digest of 

commentaries like the one above, email info@sincereco.com to request 

a username and password. This free subscription is available for 

90 days and continues for investment advisors who invest in the 

Mainstay Marketfield Fund. 

Past performance does not guarantee future results. Index performance is not 

illustrative of fund performance. For Fund performance, please call 877-742-6951. 

ITPSSA is the Italy Consumer Confidence Index - seasonally adjusted. FTSEMIB is the 

Borsa Italiana Index, a capitalisation-weighted index of 40 of the biggest companies 

chosen to represent 10 economic sectors. 

For more information about the MainStay Marketfield Fund, 

call 800-MAINSTAY (624-6782) for a prospectus or 

summary prospectus. Investors are asked to consider the 

investment objectives, risks, and charges and expenses of 

the investment carefully before investing. The prospectus or 

summary prospectus contain this and other information 

about the investment company. Please read the prospectus 

or summary prospectus carefully before investing. 

Mutual fund investing involves risk. Principal loss is possible. The 

Mainstay Marketfield Fund invests in smaller companies, which 

involve additional risks such as limited liquidity and greater volatility. 

The Mainstay Marketfield Fund invests in foreign securities which 

involve greater volatility and political, economic and currency risks 

and differences in accounting methods. These risks are greater for 

investments in emerging markets. Investments in debt securities 

typically decrease in value when interest rates rise. This risk is usually 

greater for longer-term debt securities. Investment by the 

Mainstay Marketfield Fund in lower-rated and non-rated securities 

presents a greater risk of loss to principal and interest than higherrated 

securities. Investments in asset-backed and mortgagebacked 

securities involve additional risks such as credit risk, 

prepayment risk, possible illiquidity and default, and increased susceptibility 

to adverse economic developments. The Mainstay 

Marketfield Fund regularly makes short sales of securities, which 

involves the risk that losses may exceed the original amount invested, 

however a mutual fund investor's risk is limited to the amount 

invested in a fund. The Mainstay Marketfield Fund may also use 

options and future contracts, which have the risks of unlimited 

losses of the underlying holdings due to unanticipated market 

movements and failure to correctly predict the direction of 

securities prices, interest rates and currency exchange rates. The 

investment in options is not suitable for all investors. 

The MainStay Marketfield Fund is subadvised by Marketfield Asset 

Management LLC and distributed by NYLIFE Distributors, LLC, 169 

Lackawanna Avenue, Parsippany, NJ 07054, a wholly owned 

subsidiary of New York Life Insurance Company. NYLIFE Distributors 

LLC is a Member FINRA/SIPC. 

MainStay Investments is a service mark and name under which New 

York Life Investment Management LLC does business. MainStay 

Investments, an indirect subsidiary of New York Life Insurance 

Company, New York, NY 10010, provides investment advisory 

products and services. 

Represented by 

Sincere&Co 

www.sincereco.com 

847.905.0225 

NYLIM-28329 

292 Madison Avenue 

14th Floor 

New York NY, 10017 

(212) 514-2350 

www.marketfield.com 


Practice Profile 

By Kevin Adler 

Making a Difference 

Susan John, Financial Focus, Inc. 

Fee-Only pioneer, two-time NAPFA 

board member, mentor, innovator— 

few can surpass the influence that 

Susan John, CFP ® has had on NAPFA and 

the development of Fee-Only planning. 

Matchmaker, business builder, fire 

survivor—few advisors can say that their 

careers have had as many interesting 

moments as Susan John, either. 

Founder and principal of Financial 

Focus, Inc., in Wolfeboro, NH, John is 

the classic career-changer who joined the 

planning profession because she recognized 

that it was a way to help people achieve 

their life goals. But unlike more recent 

immigrants to the field who enjoyed the 

security of entering a relatively welldefined 

operation, John was one of the 

early Fee-Only adopters who didn’t have 

a model to follow. Indeed, she and her 

colleagues helped to pave the way for 

today’s advisors. 

John came from the hospitality 

industry. She held tourism-related jobs as a 

teenager and college student in her native 

New Hampshire, and she later became 

the manager of the conference center and 

lodging and dining facility for the Aspen 

Institute in Aspen, CO. She loved the work, 

but in 1984, she decided to return to New 

Hampshire to help her mother and her 

sisters. “After I got settled back home, I 

thought about what I’d do. I had just held 

the best hotel job in the world, and I didn’t 

want to take a step back,” she says. 

Formation of 

Ballentine and Co. 

Always interested in financial matters 

and having learned something about 

them in hotel management, John took 

CFP ® classes and earned the certification. 

At about the same time, she met Roy 

Ballentine, an insurance agent who was 

trying to start a financial planning firm 

that didn’t push commissioned products on 

people who didn’t need them. It was 1986, 

and NAPFA was less than three years old. 

“This profession was just getting off the 

ground. I’m not even sure we called it ‘Fee- 

Only’ in 1986,” she laughs. 

John joined with Ballentine to form 

Ballentine and Co. (which operates today 

as Ballentine Partners). The firm charged 

hourly fees and found clients by presenting 

free consumer seminars and building a 

referral network of CPAs and attorneys. 

“We did not manage money at the time 

because few products had been devised 

for investment advisors who didn’t take 

commissions,” says John. 

Instead, they built long-term financial 

plans and helped clients to unwind 

unattractive investments they’d been sold 

by commissioned reps. “Clients would 

come to us having purchased ‘interesting’ 

financial products, and we would try to 

solve their problems,” she says. 

The firm prospered, and it hired other 

promising career-changers who believed 

in the same mission. Those professionals, 

such as Faye Doria and Warren Mackensen, 

would play prominent roles in an emerging 

NAPFA and the fledgling Fee-Only model. 

While enjoying their work, John 

and Ballantine began to see a disconnect 

between their advice and clients’ results. 

“We would give clients specific instructions 

on how to implement their plan, and they 

would agree that it was the right thing 

Continued on page 25 

Finding the Right People 

For Susan John, founder of Financial Focus, Inc., in Wolfeboro, 

NH, finding the right people for her team is more about searching for 

the ideal personal traits than it is about finding a person with specific 

technical skills. “We emphasize customer service,” says John. “I 

look for staff members who have a service mentality, which dates 

back to my days in the hospitality industry. When I see that attitude, 

then I look at whether the person has skills that we need, or whether 

the person can acquire them. It’s harder to find the right customerservice 

attitude than it is to find the right planning skills.” 

John believes she has an ability to screen for the right type 

of people and to communicate to them what she expects. “At the 

Aspen Institute, where I was hospitality manager, participants in the 

programs would include captains of business, heads of state, and 

other VIPs. When Margaret Thatcher is your guest, you develop 

confidence in how you handle yourself,” she says. 

The other thing that John emphasizes with her staff members 

is that a client’s privacy is all-important. She goes beyond the legal 

requirements for confidentiality and security, even as those are being 

tightened by regulators. “We’re in an era when nothing seems secure 

online,” she says, “but privacy is very important, especially financial 

privacy. Our firm operates in a very small community, and people 

here have high expectations about their privacy.” 

22 



RISK IS WHERE 

THE CONVERSATION 

BEGINS, 

TROWE 

NOT 

PRICE 

WHERE IT ENDS. 

For fixed income investors, the potential to 

increase yields exists — and without excessive 

exposure to credit risk or market illiquidity. 

To learn more about T. Rowe Price’s solutions, 

visit troweprice.com/conversations. 

Call 1-888-756-3784 to request a prospectus, which includes investment objectives, risks, fees, expenses, 

and other information that you should read and consider carefully before investing. 

Yield and share price will vary with interest rate changes. Investors should note that if interest rates rise significantly from current 

levels, bond fund total returns will decline. T. Rowe Price Investment Services, Inc., Distributor. 



Susan John Serves NAPFA 

Then and Now 

Susan John and Roy Ballentine were building Ballentine 

and Co. in the late 1980s when they hired Bruce Stoltenberg to 

join their team. He told them about a new organization called 

NAPFA that had been formed to support advisors who wanted 

to put their clients’ interests above commissions. They checked 

it out and joined the organization in 1989. 

“There were maybe 100 members at the time we joined,” 

John says. “Dick April and Bob Maloney really took me under 

their wing, but it was rare to even meet another person who was 

Fee-Only. At the time, our firm had me, Roy, Bruce, Warren 

Mackensen, and Faye Doria—and that was a huge firm by 

NAPFA standards.” 

The mutual support network of NAPFA members was crucial 

in those early years, and strong bonds of friendship developed 

that last to this day. (Sometimes, the connections could take 

unexpected turns. To cite just one example, John introduced 

Maloney to her friend Bonnie Hunt just a few years ago. John’s 

matchmaking instincts proved to be as good as her financial 

planning instincts: Maloney and Hunt married in 2010.) 

NAPFA’s pioneers knew that the organization would 

become stronger as its membership grew. So John dedicated 

her NAPFA volunteer hours to recruiting new members to the 

association. She also helped to create regional committees that 

would coordinate meetings and workshops. Soon, she began to 

create programming for those events, particularly in teaching 

others how to become Fee-Only advisors. “I met a lot of people 

who became great contributors to NAPFA by doing those 

transitioning workshops,” she says. 

As NAPFA grew, its influence with companies providing 

financial products and services grew, too. “As we raised 

awareness, then we were able to encourage financial firms 

to design products for us, and that was a huge benefit for 

consumers,” she says. 

In 1994, John was elected to the National Board, where she 

served for four consecutive years. During that time, regulation 

of financial advisors was being discussed at the SEC, and the 

business model of small RIAs was threatened (just like today). 

One of the signal achievements in NAPFA’s history occurred 

during this time, as NAPFA worked with the CFP Board and the 

IAFP (predecessor to the FPA) to lobby successfully for state 

oversight of smaller RIAs. 

Toward the end of her board term, John helped to develop 

NAPFA’s Fiduciary Oath, which she says is perhaps her 

proudest moment as a NAPFA member. “We recognized the 

importance of fiduciary duty in working with clients more than 

a decade ahead of today’s debate about when one is or is not 

acting in a fiduciary capacity,” she says. 

The Fiduciary Oath has stood the test of time, and it 

remains one of NAPFA’s marks of distinction in a landscape 

filled with fee-and-commission financial planners. “Advisors 

should not benefit financially from the recommendation of a 

financial product. That principle still resonates today, and I’m 

pleased that there is so much more consumer awareness of what 

it means,” John says. 

John’s work was commemorated when she received 

NAPFA’s Robert J. Underwood Distinguished Service Award 

in 1999. But that award was more like a downpayment on her 

future efforts than it was a lifetime pass that exempted her from 

more hard work. In 2008, John was elected to the National 

Board again, and she was named chair of NAPFA beginning in 

September 2010. She led an organization that was much larger 

and more established than the first time she was on the board, 

but one that faced immense challenges, too. For one thing, 

regulation of advisors soon became a major issue, and John 

helped to form Financial Planning Coalition to promote the 

interests of all independent RIAs. 

Consumer confusion about different types of financial 

advisors is another issue that never dies, says John. “In the early 

days, there was no recognition by consumers that their advisor 

was getting paid. There was a perception that advice was free. 

Now, it’s more subtle, because everyone wants to call themselves 

an ‘advisor’ regardless of whether their focus is providing advice 

or selling a product,” she says. 

And yet, the message of objective, fiduciary planning still 

resonates strongly, and on a greater scale than ever before. “One 

of the highlights of my time as chair was being able to meet 

with Japanese advisors to talk about developing a Fee-Only 

model there,” John says. 

Summing up NAPFA’s biggest achievements in the 20-plus 

years she has been associated with the organization, John listed 

the following: 

• Education standards. NAPFA set the bar high for education 

and kept raising it. Ideas that NAPFA introduced, such 

as a broader CFP curriculum and making counseling a 

continuing education requirement, have been adopted. 

• Peer review. The requirement that a prospective NAPFA 

member must submit a comprehensive financial 

plan for review reflects the importance of providing 

comprehensive services. 

• Fiduciary Oath. That oath created in 1998 has required 

members to adhere to a strict fiduciary standard, and it’s still 

in the vanguard of how financial planners should serve their 

clients. 

• Financial products. Any person new to financial planning 

today does not understand how few commission-free 

products were available 20 years ago. The availability of 

no-commission products enables advisors to work in their 

clients’ best interests, and inexpensively. 

• Building the profession. “Look how many people are Fee- 

Only advisors today. We changed the world,” John says. 

24 



Continued from page 22 

to do. But they would find it difficult 

to implement, or they would lack the 

discipline,” says John. 

“Either the client wouldn’t 

implement the plan, or they would go to a 

commissioned person for implementation, 

and that person would say, ‘just sign here,’ 

and the client would have bad results,” she 

continues. “It was incredibly frustrating.” 

Starting Her Own Firm 

John decided that she needed to be an 

implementer, if that’s what it took to get 

clients on a truly secure financial path. 

She went out on her own in 1995, 

determined to develop a model that would 

put implementation on an equal footing 

with giving advice. “I discovered that I had 

stepped into a whole different business,” 

she says. “I needed more tools than were 

available at the time, so I’d talk with 

companies about providing products and 

services that fit for our no-fee model.” 

Emphasizing the holistic nature of 

her service, she switched from Ballentine 

and Co.’s hourly compensation model to a 

retainer that was roughly correlated to assets 

managed. The retainer model remains at 

Financial Focus today, and it’s the backbone 

of a strong relationship with her clients. “We 

believe in transparency of fees,” she says. 

“We completely review our fee with our 

clients once per year. We also show them all 

the other fees they pay, like transaction fees 

and management fees inside mutual funds.” 

To emphasize transparency, clients 

receive a bill on a quarterly basis, even 

when the fee is debited from their 

portfolios. “It works for us. Very seldom 

has someone looked at what they are 

paying and asked what are you doing for 

me,” she says. 

“When I’d first moved back to New Hampshire, I went to a skills assessment program 

developed by the Johnson O’Connor Research Foundation. Tests revealed that I like to 

solve problems and that I have a facility for extrapolating conclusions from information. 

It also showed that I like people,” says Susan John. “All of this feeds into being a 

financial advisor.” 

Team Approach 

Today, Financial Focus has seven 

employees. Three people, including John, 

are advisors who have CFP ® certificates, 

and each of them has a specialty, such 

as estate planning or taxes. Another 

member of the team, Vice President 

Kristen Madden, is responsible for 

running the back office and handling 

client communications. Her indispensable 

contributions to the firm are reflected in 

the fact that she’s co-owner. Three support 

people round out the staff, and they are 

experts on running the firm’s critical 

software. 

The advisors work in teams to 

provide clients with financial planning, 

estate and tax planning, insurance advice, 

and more. It’s a high-touch operation 

in which specific aspects of every 

client’s plan are reviewed each quarter, 

and that review is presented through a 

personal meeting, a phone call, or e-mail 

communication. (See box on page 22 for 

more.) 

Providing superior customer service 

is a priority, and enhancing that hightouch 

service is a never-ending task. Two 

years ago, concurrent with her election as 

chair of NAPFA for the second time, John 

embarked on an overhaul of the firm’s 

financial planning and CRM software 

and replaced her IT manager. After the 

transition, she now uses Salesforce for 

CRM and publishes a revamped website 

through AdvisorSites. 

“It was driven by our need to provide 

better customer service,” she says. 

“When a client calls, that will lead to a 

course of action; the client has a problem 

that needs to be solved. All of us in the 

firm need to be able to keep track of it, 

and everybody needs to see what they are 

responsible for doing and what everyone 

else is doing.” 

The business is nearly paperless, 

with scanning and saving of documents 

done through Laserfiche. “We first 

implemented a system of scanning 

documents in 1997. When our building 

burned down in 2005, that came in very 

handy,” she says in a matter-of-fact tone. 

“The fire occurred on a Friday, and we 

were open in a new location on Monday.” 

In addition to being able to bounce 

back from the unexpected, the team 

approach and integrated technology have 

created a system that is not dependent on 

a single person. “Everyone at the firm is 

capable of helping our clients, and that’s 

how it needs to be,” she says. “We got a 

good test when I was NAPFA’s chair and 

not as available.” 

With operations going so smoothly, 

John is thinking about a succession plan. 

The ideas are early in development, 

but John says they will become a 

priority in the next few years, and not 

just for herself. “Clients want to know 

that there’s a long-term plan that goes 

beyond my retirement. We deal with a 

lot of families, and they want support 

across multiple generations,” she says. 

“Nothing is imminent, but we’re talking 

with all of our firm’s members about 

alternatives. We are getting input from 

everybody—and that’s the right way to 

do it.” 

Doing it the right way is what Susan 

John has been all about for more than two 

decades. 


practice made perfect 

by Linda Leitz, CFp® 

When do Clients’ 

poor deCisions 

signAL bigger probLems? 

Each of us wants to do what’s right 

for our clients. There are times 

when we decide things can move at 

a slow pace so that clients are comfortable 

with our advice. Sometimes, we even 

agree with clients when they do something 

substantially different than we’ve 

recommended. 

There is at least one situation, though, 

when we may need to take action that our 

clients won’t like. That’s when a client is 

suffering from dementia. What do we do 

when a client’s forgetfulness may become 

a danger to himself or herself, financially 

or otherwise? I asked some of our NAPFA 

colleagues for their advice. 

The Clues 

There are several signs that a client 

may be slipping mentally. Finance 

Professor Ray Forgue, Ph.D., who is the 

consumer representative on the NAPFA 

Board, has written about taking care of 

aging family members. He suggests that 

advisors look for changes in appearance 

that indicate the client isn’t maintaining 

NAPFA Consumer 

Education Foundation 

Promoting Consumer Financial Education 

The NAPFA Consumer Education Foundation’s 

mission is to educate consumers about basic 

financial matters and help them identify 

financial services that are in their best interest. 

Contact the Foundation today 

to find out how you can help. 

Lisa Lenczewski 

NCEF Coordinator 

lisal@napfa.org 

847.483.5400 Ext. 106 

personal cleanliness standards. Also, 

advisors should be aware if the client 

is missing appointments. If the client 

misses an appointment, follow up with 

a phone call. The conversation may give 

clues that a person isn’t following you or 

is forgetting things he wouldn’t have in 

the past. “If you know your client well 

enough, you know when they aren’t acting 

as usual,” Forgue said. 

Troy E. Thompson, a planner in 

Portland, OR, is both a CFP ® and an 

attorney. He said to watch for spending 

that doesn’t fit past patterns, travel plans 

for someone who’s not in good physical 

condition, and dramatic spending changes 

they haven’t consulted you about. If a 

client’s situation seems extreme, take no 

action, but suggest to him—and (possibly) 

family members—that he be evaluated. 

Thompson recommends that planners 

ask for an introduction to family members 

at the start of the planning relationship, 

so that if these types of issues arise, the 

planner and relatives will have some 

familiarity with each other. Even better is 

to have the client’s kids involved in the 

planning process in some way. Then, when 

an advisor reaches out to family members 

to express a concern, pay attention to what 

they say in response. 

However, don’t go too far. As a 

fiduciary, you have to be cognizant of 

who your client is and, if he’s competent, 

follow his wishes. “There is a world of 

difference between counseling with a 

client and refusing to follow instructions,” 

says Thompson. “On one side is a clear 

breach of duty, [but] on the other is clearly 

a requirement.” You might have to tell 


26 


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your client that you can no longer follow 

his instructions and tell him, instead, 

that you believe he needs to follow your 

instructions. The client may be angry and 

may feel betrayed. 

The Response 

While it’s very unscientific, my 

experience with family members and 

clients as they are slipping into dementia 

is that the person becomes someone other 

than the person you’ve known, at least for 

a while. I’ve seen people with dementia 

initially express fear and concern because 

they are confused and forgetting things. 

Then, it seems common for them to go 

through some pretty major anger. They 

don’t like someone suggesting they’re not 

okay. At some point, paranoia often makes 

an appearance. They believe that people— 

possibly including you—are trying to get 

to their money and to deprive them of 

their freedom. 

Most of us wouldn’t take on a client 

who behaved this way. But when we’re 

dealing with a client with whom we have 

an established relationship, an immediate 

decision to walk away lacks compassion 

and professionalism. That being said, the 

planner has to protect herself as well as 

the client. 

Proactive is Better 

than Reactive 

Being proactive is better than being 

reactive. “Like a lot of issues that we 

work with, it’s what you could have done 

six months ago to make the situation 

better, rather than what we can do now to 

extricate yourself,” Thompson says. 

One important step is having a durable 

power of attorney (POA). Thompson 

prefers to have a POA that’s immediately 

activated, instead of a POA with a clause 

that activates on the incapacity of the 

client, because, generally, a doctor needs to 

certify incapacity. Sometimes, it’s urgent, 

so going through the process of a doctor’s 

certification can be a harmful delay. If there 

is a triggering mechanism in the POA, 

make sure you know what it is. 

As you advise clients who 

are establishing their estate plan, 

Thompson says, “Try to set forth all the 

considerations.” Give the pros and cons of 

immediate or springing powers, then let 

them decide (while being careful not to 

give legal advice). 

Planner Kenneth F. Robinson is a 

CFP ® and an attorney. His approach with 

clients “of a certain age” is to ask for 

permission to contact adult children if he 

notices memory issues. Some agree. But 

Robinson emphasizes the limitations of 

what an advisor can see and do. “We’re 

not as likely to see it as quickly,” Robinson 

says in regard to cognitive deterioration, 

“because we don’t see them as often.” 

“Like a lot of issues 

that we work with, 

it’s what you could 

have done six months 

ago to make the 

situation better, 

rather than what 

we can do now to 

extricate yourself.” 

-Troy E. Thompson, CFP® 

If the clients are multi-generational 

family members, advisors can inquire 

about the older client when they meet 

with other family members. “We act as 

fiduciaries, so our job is always to put the 

client first,” says Robinson, though he 

adds that these are situations in which it’s 

hard to know where fiduciary duty lies, 

and to which client. 

Your client contract can address this 

issue. Many advisors have a confidentiality 

clause, but you can also have a clause 

authorizing you to contact family or a 

trusted friend if you have concerns. Then 

you can have a list of emergency contacts 

for each client that is updated periodically. 

Avoidance 

After reading about these issues, 

you might think that the solution is to 

work only with younger clients. Not so. 

Dementia isn’t just a geriatric problem, 

and other diseases that are indiscriminant 

relative to age can affect cognitive 

abilities, too. Conditions such as bi-polar 

disorder and schizophrenia don’t always 

exhibit symptoms immediately and 

develop at different ages—sometimes 

quite suddenly. Issues such as alcoholism 

and addiction will sometimes have 

symptoms that can wreak havoc on 

financial and other aspects of a life. Even 

some of the drugs we see advertised on 

TV warn of side effects that can include 

irrational behaviors (not to mention hair 

loss and bad skin!). For those reasons, 

having emergency contacts for all clients 

can be a good protection for them, and 

doing so could prevent angst for you. 

Some less-than-optimal client 

behaviors are situational and temporary. 

For example, clients going through a 

divorce or the death of a spouse or other 

family member often will have trouble 

focusing and remembering things. They 

may make decisions that are not as wise 

as those they would make under normal 

circumstances. Our counsel in these 

situations can be a financial lifesaver, too. 

In our practice, my business partner 

and I work with many widows, as well 

as with divorcing individuals. Some of 

these professional relationships don’t 

survive the personal trauma. As much as 

we want to help them, they’re not in an 

emotional state that’s conducive to advice. 

At the recent NAPFA East Conference 

in Baltimore, wrap-up speaker Daniel 

Shapiro advised that, many times, the 

concerns of others can be addressed 

through showing appreciation for them. 

As simple as it sounds, showing we 

understand our clients, finding merit in 

their viewpoints, and communicating 

our concerns directly can make a huge 

difference. 

Worth It 

For many of us, having clients with 

“easy problems” doesn’t necessarily equal 

a full or rewarding practice. We are in a 

helping profession, which, by definition, 

means that some of our clients need 

quite a bit of help. Being prepared for 

the unfortunate contingency of cognitive 

impairment allows us to make a huge 

positive impact. 

Linda Leitz is a NAPFA-Registered 

Financial Advisor practicing in Colorado 

Springs, CO. She can be contacted at 

Linda@Brightleitz.com. 

28 


Parnassus Mid-Cap Fund SM 

Seeking capital appreciation in an overlooked market-cap 

Parnassus Mid-Cap Fund SM 

PARMX 

PARNASSUS NEW 

TOTAL % RETURNS 

As of 9/30/12 3 Month YTD 1 Year 3 Year 5 Year 

Since 

Inception 

4/29/05 

Gross 

Expense 

Ratio a 

Parnassus Mid-Cap Fund 4.76 15.66 30.44 15.56 5.06 7.08 1.20 1.20 

Russell Midcap Index 5.59 14.00 28.03 14.26 2.24 6.93 NA NA 

Net 

Expense 

Ratio a 

All returns greater than one year are annualized. 

a 

As described in the Funds’ current prospectus dated May 1, 2012, Parnassus Investments has contractually agreed 

to limit the total operating expenses (exclusive of acquired fund fees and expenses) to 1.20% of the net assets of 

the Parnassus Mid-Cap Fund. These limitations continue until May 1, 2013, and may be continued indefinitely by the 

Adviser on a year-to-year basis. 

Performance data quoted represent past performance and are no guarantee of future returns. Current performance 

may be lower or higher than the performance data quoted, and the most recent month-end performance is available 

on the Parnassus website (www.parnassus.com). Investment return and principal will fluctuate so that an investor’s 

shares, when redeemed, may be worth more or less than their original principal cost. The Russell Midcap Index is a 

widely recognized indexes of common stock prices.An individual cannot invest directly in an index. An index reflects 

no deductions for fees, expenses or taxes. Returns shown for the Funds do not reflect the declaration of taxes a 

shareholder would pay on the fund distributions or the redemption of fund shares. 

Common stock prices fluctuate based on changes to a company’s financial condition and on overall market and economic 

conditions. Mid-cap companies can be particularly sensitive to changing economic conditions and have fewer financial 

resources than large-cap companies. 

The Parnassus Funds are underwritten and distributed by Parnassus Funds Distributor, a subsidiary of Parnassus 

Investments and a FINRA member. 

Before investing, an investor should carefully consider the investment objectives, risks, charges and 

expenses of the fund and should carefully read the prospectus or summary prospectus, which contains 

this information. A prospectus or summary prospectus can be obtained on the website, www.parnassus. 

com, or by calling (800) 999-3505. 


Insurance Planning 

By Robert M. Barnes, CLU, ChFC, CWPP 

Understanding the Tax Impact of 

Employer-Owned Life Insurance 

Are you aware of the insurance 

regulations that went into effect 

in August 2006? Don’t be afraid 

to say “no,” as you certainly are not the 

only financial advisor who is unfamiliar 

with these important rules. And it’s not 

just advisors—insurance agents, attorneys, 

and accountants might be overlooking 

them, too. Yet not complying with the 

rules could cost your client a great deal 

of money by making the receipt of a life 

insurance benefit a taxable event. 

Federal rules for employer-owned 

life insurance (EOLI) can be found in the 

Internal Revenue Code, Section 101(j), 

which was finalized in 2006. It outlines 

when EOLI benefits would be taxed, and 

when they would be eligible for tax-free 

distribution just like other life insurance 

benefits. The rule also defines what a 

business owner must do to earn the taxexempt 

status. Basically, if a business 

owner purchased a policy after Aug. 17, 

2006, he or she is required to document, 

disclose, and report the purchase. If the 

disclosure rules (explained below) are not 

met, the death benefit will not be exempt 

from taxation. 

How did we get here? In the 1980s 

and ‘90s, a large number of employers, 

including Wal-Mart, purchased life 

insurance on most, or all, of their 

employees (hence the policies’ nickname 

of “janitor insurance”). The companies 

were the beneficiaries of the policies. They 

borrowed money to purchase the policies 

and deducted interest on the loans. It was 

easy money. 

Lawsuits were filed and won by 

certain front-line employees who argued 

that they lacked insurable interest, 

especially if the policies were maintained 

after they left their employer. Some 

companies were required to pay the life 

proceeds to the deceased employees’ 

families, and some settlements included 

additional penalties. 

In the aftermath, laws were put in 

place to regulate EOLI transactions. The 

regulations now include definitions of 

insurable interest and other minimum 

requirements that are necessary for 

employers to insure an employee while 

maintaining a tax-free benefit status. 

The Rules 

Under current law, a transaction as 

simple as a sole owner of an S-corporation 

buying “key man” coverage on his life 

will trigger compliance requirements. 

Even when the insurance purchase does 

qualify under IRC Section 101(j), a 

business owner might find that owning 

insurance individually will be easier. 

Complying with the EOLI rules 

and guidelines begins by understanding 

the three-step notice and consent 

requirements: 

• Disclosure. The employee must 

receive notice that the employer will 

be purchasing life insurance and will 

be the primary beneficiary of the 

policy. The notice must also identify 

the maximum amount of coverage to 

be placed on the employee. 

• Documentation. The employee must 

agree in writing to be insured and to 

allow the employer to retain coverage 

beyond his employment era. 

• Reporting. The employer must file 

IRS Form 8925 annually. 

One more important point: EOLI 

death benefits are taxable to the extent 

the death benefit exceeds premiums paid. 

However, the death benefit becomes 

tax-free if the employer complies with 

the EOLI notice, consent, and reporting 

requirements of Section 101(j), AND if the 

employee fits one of the safe harbor rules 

created by this legislation. Here are the 

four safe harbors: 

• The insured is a highly compensated 

employee who fits into at least one 

of the following categories: 

° A director, 

° A five-percent or greater 

owner, 

° Received compensation in 

excess of $115,000 in 2012 

(adjusts for inflation), 

° One of the five highestpaid 

officers, or among the 

highest-paid 35 percent of all 

employees. 

• The insured is an employee within 

one year of death. 

• The death benefit is paid to the 

insured’s personal beneficiary, 

which can include: a member of 

the insured’s immediate family; 

a trust for which the insured is a 

beneficiary; or the estate of the 

insured. 

• The proceeds are used to purchase an 

interest in the business. 

It is also important to mention that a 

“material change” to a policy purchased 

prior to implementation of the regulations 

could trigger the need to comply with the 

EOLI requirements as a “new” contract. 

Furthermore, the employee’s consent must 

be made before the policy is “issued.” In 

2009, the IRS published Notice 2009-48, 

which further defined the term “issued” 

as the later of: 1) the date of application 

for coverage; 2) the effective date of 

coverage; or 3) the date of formal issuance 

of the contract. 

As with many laws that are relatively 

new, this one has not been extensively 


30 


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tested in the court system, so there are still 

some uncertainties about who is affected. 

From the perspective of a business 

owner, the specific definition of “material 

change” could be better-defined. Also, 

there appears to be no method of “fixing” 

a violation if an employer failed to comply 

on purchases or material changes made 

after Aug. 17, 2006. Interpretations of the 

law indicate that an employer might be 

able to rewrite the coverage if it’s a term 

policy, or perhaps use a 1035 exchange 

Micro-Cap Companies 

Our Future 

Shouldn’t everyone own some? 

The Perkins Discovery Fund 

The Perkins Discovery Fund uses a combination of fundamental analysis 

and technical chart analysis in a “bottom-up” investment style that focuses 

on micro-cap companies in its search for long-term appreciation. 

Please call for additional information 

(800) 998-3190 PDFDX www.perkinscap.com 

Average Annualized Total Returns as of September 30, 2012 

Inception 

Date 

Perkins Discovery Fund 04/09/98 

DJ Wilshire U.S. Micro-Cap Index 

Russell 2000 Index 

NASDAQ Composite Index 

S&P 500 Index 

Gross Expense Ratio - 2.49% Net Expense Ratio - 2.01% 1 

Performance data quoted represents past performance; past performance does not guarantee 

future results. The investment return and principal value of an investment will fl uctuate so that 

an investor’s shares, when redeemed, may be worth more or less than their original cost. Current 

PERKINS HALF 

performance of the fund may be lower or higher than the performance quoted. Performance data 

current to the most recent month end may be obtained by calling 1-800-998-3190. The fund imposes 

a 1.00% redemption fee on shares held less than 90 days. Performance data quoted does not refl ect 

the redemption fee. If refl ected, total returns would be reduced. Investment performance for the 

fund reflects fee waivers in effect. In the absence of such waivers, total return would be reduced. 

1 

The adviser has contractually agreed to cap expenses to 2.00% indefinitely. 

The fund’s investment objectives, risks, charges and expenses must be considered carefully 

before investing. The Statutory and Summary Prospectuses contain this and other important 

information about the investment company, and may be obtained by calling 800-366-8361, 

or visiting www.perkinscapital.com. Read carefully before investing. 

Small-capitalization companies tend to have limited liquidity and greater price volatility than 

large-capitalization companies. The fund invests in micro-cap and early stage companies 

which tend to be more volatile and somewhat more speculative than investments in more 

established companies. As a result, investors considering an investment in the Fund should 

consider their ability to withstand the volatility of the Fund’s net asset value associated with 

the risks of the portfolio. 

The Dow Jones Wilshire U.S. Micro-Cap Index is formed by taking the 2,500 smallest 

companies, as measured by market capitalization, of the Dow Jones Wilshire 5000 Index. 

The Russell 2000 Index is composed of the 2,000 smallest companies in the Russell 3000 Index, 

and is widely regarded in the industry as the premier measure of small-cap stocks. The S&P 500 

Index is a broad based unmanaged index of 500 stocks widely recognized as representative of the 

equity market. The NASDAQ Composite Index is a broad-based capitalization-weighted index of 

all NASDAQ national market and small-cap stocks. One cannot invest directly in an index. 

Quasar Distributors, LLC, Distributor 

Since 

Inception 

10 year 5 year 3 year 1 year 

10.61% 10.94% -1.94% 8.67% 19.81% 

7.48% 11.03% 0.68% 10.34% 35.87% 

5.29% 10.17% 2.21% 12.99% 31.91% 

3.78% 10.27% 2.90% 13.66% 29.02% 

3.67% 8.01% 1.05% 13.20% 30.20% 

with a larger death benefit if permanent 

insurance is involved. However, these 

areas could use more clarity, even though 

the IRS issued its interpretation guidelines 

in 2009. 

Impact on Advisors 

The question a financial advisor needs 

to answer is: What is my professional 

obligation in EOLI transactions? Best 

practices suggest that advisors working 

with business owners need to report the 

details to both the individual’s attorney 

and accountant, as well as to the attorney, 

accountant, and CFO of the business 

(depending on the size of the business). 

The attorney (not the advisor) should draft 

the consent form, and the accountant is 

required to file the IRS Form 8925. 

One way that an advisor can facilitate 

the process is to develop an EOLI kit, 

and my firm has developed such a 

checklist. I send my EOLI kit by e-mail 

to all relevant parties involved with a 

reply-request to confirm their receipt and 

acknowledgement of the information. (For 

a copy of the kit, send an e-mail to Robert 

Barnes at rob@intinsconsulting.com, with 

“EOLI Kit” in the subject line.) 

While getting involved in 

EOLI notification does create some 

complications for advisors, the upside 

is worth the effort. It’s an opportunity 

to create new relationships by calling 

a client’s attorney and accountant. It’s 

an opportunity to show a client that the 

advisor is on top of important issues 

and that he or she can work with the rest 

of the client’s financial and legal team. 

Finally, it’s important that the advisor 

work with an insurance partner to provide 

all of the facts about clients who are 

business owners, in order to assure a 

client’s needs are being met and that 

everyone is in compliance with the law. 

Robert M. Barnes, CLU, ChFC, 

CWPP, is president of Integrated 

Insurance Consulting, LLC, a NAPFA 

Resource Partner. He specializes in the 

use of life insurance for business and 

estate planning. He can be reached at 

708.307.2577 or Rob@intinsconsulting. 

com. 

32 


SENTSABLES FULL 


eye on... social engagement 

by Jim blankenship 

getting serious About blogging 

With all of the social engagement 

applications available these 

days, including blogs, Twitter, 

Facebook, Google+, and others, the average 

guy or gal on the block has unprecedented 

access to amazing mass communication 

options. I’ve been blogging, tweeting, etc., 

for several years now, and I’ve thought for 

a long time that these tools could be put to 

use to improve society, rather than just for 

sending funny cat photos to one another. 

With this in mind, I started thinking 

about how the savings rate in the United 

States is abysmal these days, somewhere 

less than 5 percent according to the 

latest data. I’ve been a part of “blogger 

movements” as a contributor in the past, 

so I thought it might be a good idea to 

start a movement of my own. 

In early November 2012, I launched 

a movement among my fellow financial 

bloggers to encourage all Americans 

to add at least 1 percent more to their 

retirement savings for the coming year. 

Knowing that most large corporations 

enter into their annual benefits enrollment 

cycle during November, I figured this was 

the perfect month to stage the movement. 

I knew that beginning from scratch 

would be an uphill climb, but I also 

knew that my fellow NAPFA and Garrett 

Planning Network brethren and sistren (Is 

sistren a real word? Youbetcha!) would 

come through to help. And help they did! 

The result is that we’ve had a total of 

23 bloggers who’ve written articles that 

encourage a minimal increase to savings— 

including advice on ways to “find” the 

extra 1 percent or more. This talented 

group has written some great articles with 

many wonderful ideas and encouragement. 

We’re still tallying the numbers, but at 

last count these articles have been seen by 

more than 168,000 blog readers, as well as 

10,000-plus Twitter, LinkedIn, Google+, 

and Facebook followers. 

I plan to keep a close eye on the 

national savings rate over the coming year; 

for the record, it was 3.3 percent as of 

September 2012. I don’t feign to imagine 

that we’ve actually made a measurable 

difference, but maybe, just maybe. 

The other thing that has happened 

through all of this has been great interaction 

with other financially oriented writers 

who I may not have come in contact with 

otherwise. I’ve met new people, made new 

contacts, and have learned a lot. It’s early 

in the process, but at this point I intend to 

continue with this movement again next 

November, and I already have a great start 

with the contacts I’ve made. 

Jim Blankenship, CFP ® , EA is a 

NAPFA member in New Berlin, IL. His blog 

is www.FinancialDucksInaRow.com, and his 

e-mail is jim@blankenshipfinancial.com. 

NAPFA ADVIS R 

mAgAZine 

FOR SINGLE ARTICLE 

REPRINTS 

Contact Ric Haines 

Publisher & Director of Magazine Operations 

ric.haines@erhassoc.com 

Phone: 732.920.4236 

34 


I wanted a 

TD ameritrade 

culture of yes. 

What I got was 

a culture of absolutely. 

At TD Ameritrade Institutional, advisors are at the center 

of what we do, and service is at the core of our culture. 

So if you want to talk about your business, hammer out 

your goals, or ask us to consider a way to serve you 

better, we’re all ears. Why? Because we’re uniquely 

focused on what’s best for our clients. Just like you. 

TD Ameritrade Institutional. We’re listening. 

Call us at 800-934-6124 or explore the way we 

support RIAs at tdainstitutional.com/ourcommitment 

Follow Us 

TD Ameritrade Institutional, Division of TD Ameritrade, Inc., member FINRA/SIPC/NFA. TD Ameritrade 

is a trademark jointly owned by TD Ameritrade IP Company, Inc., and The Toronto-Dominion Bank. 

©2012 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission. 


Kevin Adler, kadler2@earthlink.net 

In the Limelight 

Former NAPFA Chair Tom Orecchio 

was named one of the six recipients of the 

Financial Planning Magazine “Industry 

Contributor” Influencer Award. He was 

commended for his service to the industry, 

especially his key role in bringing together 

the leadership of FPA and the CFP Board 

to work together on consumer-related 

issues in the wake of the financial crisis 

that began in fall 2008. 

Tom Nowak, CFP ® reports that a 

portfolio based on the ideas in his book, 

Low-Fee, Socially Responsible Investing, 

has been set up on Motif Investing 

(motifinvesting.com). Hardeep Walia, cofounder 

and CEO of Motif Investing, was 

a speaker at the NAPFA East Conference 

in November 2012 (see Conference 

Review on pages 14-16 of this issue of the 

Advisor). 

Rick Rodgers told the Altoona (PA) 

Mirror newspaper on Nov. 4 that many 

people can reduce the cost of their auto 

insurance by taking simple steps such as 

shopping around for quotes, combining 

auto and homeowners’ policies with the 

same company, or raising their deductible. 

Stan and Hildy Richelson contributed 

an article to the AAII Journal’s October 

2012 issue, “Using Bonds Instead of 

Stocks for Portfolio Income.” Their advice 

in a nutshell: “We don’t buy bonds for 

capital appreciation, though investors who 

purchased them in 2008-2011 have seen 

a lot of appreciation. We recommend that 

you purchase them for cash flow. Create a 

bond paycheck for yourself to support you 

in whatever you choose to do.” Their article 

generated more than 20 online comments. 

RegentAtlantic donated $5,000 and 

served as a lead sponsor for the Community 

Soup Kitchen of Morristown, NJ, for 

its 2012 Hunger Walk. RegentAtlantic 

publicized the event through its website, 

helping to raise publicity for the event, 

which attracted nearly 1,000 participants. 

In talking with the Wall Street 

Journal on Nov. 23 about the security of 

investors’ accounts, Owen Murray said 

that investors are probably unaware of 

the difference between setting up a cash 

account and a margin account with a 

broker-dealer that is holding their money. 

The cash account is safer because the 

margin account can possibly be used 

as collateral by the firm if it gets into 

financial trouble. 

Stewart Welch III, CFP, AEP, 

contributed a blog posting to the online 

publication of the Birmingham News about 

long-term care insurance. He said that 

people who currently have LTC policies 

should probably keep them, despite the 

steep rate increases they are facing now 

and will be likely to incur in the future. 

Welch’s reasoning is that dropping 

coverage and then seeking it later will 

likely expose a person to even higher rates 

or more restrictive coverage. 

David Blain, Wallace Larson, 

Jennifer Murray, and Roger Pine talked 

with the Wall Street Journal in early 

December about stocks that could be 

purchased for kids as holiday presents. 

Blain suggested the Vanguard Total 

International Stock Index Fund, in order 

to show youngsters that the world is a 

NAPFA is grateful to all of the advertisers for their support of NAPFA and 

the NAPFA Advisor. However, readers should understand that NAPFA can undertake 

no duty to perform due diligence about the claims and promises made by advertisers. 

Furthermore, admission of a company as an advertiser in the Advisor does not constitute 

an endorsement of its services or products by NAPFA. Readers should perform their 

own due diligence on any products or services that they use or recommend to their 

clients. Nevertheless, an advertiser is expected to advertise only services and products 

that have economic viability and that fully comply with applicable law and NAPFA’s 

professional standards. 

global economy. Larson and Murray 

recommended the Vanguard Total Stock 

Market Index Fund for its low cost 

and broad exposure, both valuable for 

presumably long-term investors. However, 

both Vanguard funds have $3,000 

investment minimums. Pine suggested 

energy stocks or companies that serve the 

energy industry, like oil pipelines. 

In December, NAPFA Chair Lauren 

Locker spoke with the Fiscal Times about 

consumers’ confusion about the difference 

between Fee-Only and fee-based advisors. 

NAPFA was prominently mentioned in the 

article. 

Diahann Lassus, CFP ® , CPA/PFS 

participated in the “How Women Lead” 

seminar at the U.S. Chamber of Commerce 

in Washington, DC, on Nov. 13. 

Advertisers In This Issue 

Artio Global Management....Inside front 

Centsables............................................. 33 

Clayton Capital Partners...................... 16 

Jefferson National................. Inside back 

Low-Load Insurance.............................. 7 

NAPFA Consumer Education Foundation...26 

New Direction IRA.............................. 27 

Paradigm................................................. 2 

Parnassus............................................... 29 

Perkins................................................... 32 

Ryan Insurance....................................... 4 

Select Sectors SPDRs........... Back cover 

Sincere & Co./Marketfield.............20-21 

Sierra................................................12-13 

Sunwest Trust......................................... 1 

T Rowe Price........................................ 23 

TD Ameritrade Institutional................ 35 

YieldQuest.............................................. 9 

36 


“WOW!” 

AND OTHER EXPERT INSIGHTS FROM 

RIAs AND ABOUT OUR TAX-EFFICIENT 

INVESTING SOLUTION. 

What if we could give you an innovative solution to tax-defer all 

those “tax-ugly” assets in your clients’ portfolios? 

A tool with 360+ investment options from more than 40 fund 

families, a at-fee of just $20/month, 1 and no M&E charge? 

Welcome to the ingenious VA that does just that. 

Monument Advisor delivers what RIAs long for: A solution to 

those “tax-ugly” assets such as bonds, alternatives, REITs — 

or any other funds that generate ordinary income or short-term 

capital gains. A tax-ef cient solution that more than 1,600 RIAs 

have already bought into to the tune of $1 billion plus. 

Give us your bonds, your alternatives, your “tax-ugly” assets 

yearning to be freed, and we will show you how. 

Learn more about Monument Advisor: 

Call 1.866.667.0564, option 1. 

Or visit www.jeffnat.com/ingenious 

1 Jefferson National’s Monument Advisor has a $20 monthly at-insurance fee. Additional fees ranging from $19.99-$49.99 will be assessed for investors wishing to purchase shares of ultra low-cost 

funds. See the prospectus for details. Variable Annuities involve risk, including possible loss of principal. Please see current product and underlying investment portfolio prospectuses for more complete 

information. Monument Advisor is issued by Jefferson National Life Insurance Company (Dallas, TX) and distributed by Jefferson National Securities Corporation, FINRA member. Policy series 

JNL-2300-1, JNL-2300-2. 

JNL201202-A019 

FOR FINANCIAL PROFESSIONAL USE ONLY. NOT FOR PUBLIC USE. 


TAKE A NEW LINE WITH YOUR 

EQUITY 

Potential benefits of adding Sector SPDR ETFs to your 

portfolio include: 

• Undiluted exposure to a specific sector of the S&P 500 

• The all-day tradability of stocks 

• The diversification of mutual funds 

• Total transparency 

• Liquidity 

Time For A 

Stock Alternative 

Visit www.sectorspdrs.com 

or call 1-866-SECTOR-ETF 

Consumer Discretionary - XLY Consumer Staples - XLP Utilities - XLU Financial - XLF Technology - XLK Health Care - XLV Energy - XLE Industrial - XLI Materials - XLB 

An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information, 

call 1-866-SECTOR-ETF or visit www.sectorspdrs.com. Read the prospectus carefully before investing. 

The S&P 500, SPDRs, and Select Sector SPDRs are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use. The stocks included in each Select Sector Index 

were selected by the compilation agent. Their composition and weighting can be expected to differ to that in any similar indexes that are published by S&P. The S&P 500 Index is an 

unmanaged index of 500 common stocks that is generally considered representative of the U.S. stock market. The index is heavily weighted toward stocks with large market capitalizations 

and represents approximately two-thirds of the total market value of all domestic common stocks. Investors cannot invest directly in an index. The S&P 500 Index fi gures do not refl ect 

any fees, expenses or taxes. Ordinary brokerage commissions apply. ETFs are considered transparent because their portfolio holdings are disclosed daily. Liquidity is characterized by a 

high level of trading activity. 

Select Sector SPDRs are subject to risks similar to those of stocks, including those regarding short-selling and margin account maintenance. All ETFs are subject to risk, including possible 

loss of principal. Funds focusing on a single sector generally experience greater volatility. Diversifi cation does not eliminate the risk of experiencing investment losses. 

ALPS 38 Distributors, 

Napfa 

Inc. 

Advisor 

a registered 

DECember 

broker-dealer, is 

2012 

distributor for the Select Sector SPDR Trust.

Making a Difference - NAPFA

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