Q&A with Kelli Hueler: - Napfa

Napfa advis r
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Q& A with
Kelli Hueler:
How low-cost annuities
figure in the battle for
401(k) rollovers
october 2012

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from the Editor
a New feature
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
In this issue, we debut a new feature that we
hope will become a very popular part of the
magazine. As the cover photo indicates, we
have an exclusive interview with Kelli Hueler,
president and CEO of Hueler Companies, the
developer of an online platform for analyzing and
purchasing low-cost annuities.
The Q&A represents the first in a series of interviews we plan
to publish with key members of the financial services industry. In
the months ahead, we will be speaking with investment managers,
practice management consultants, insurance professionals, and
others. We hope to get their perspectives on the issues that matter to
Fee-Only advisors.
Conducting these interviews is not as easy as it might seem.
The end product might look as smooth as a financial plan in a fancy
binder—but, just like that financial plan, a lot of work is hidden
below the surface.
The Q&A with Hueler began in May with a suggestion from a
NAPFA staff member. I contacted Hueler and gauged her interest,
and she provided me with background information, including a
40-page research paper she had co-authored. After I had reviewed
the materials, we conducted a preliminary conversation to exchange
ideas about what might be covered in the Q&A. Then I sent her
a general outline of questions in advance of a phone interview
conducted in September. After the interview, I transcribed the
conversation and selected the most relevant parts. Finally, Hueler
reviewed the draft in order to correct errors or fix omissions.
The result, I hope, is an illuminating look at developments in the
availability and use of low-cost immediate annuities as part of a
comprehensive financial plan.
Given the long gestation period to produce the Q&A, we won’t
be presenting these interviews in every issue, but we think they
will be worth the wait. We’ve even decided to add another factor
into the mix: NAPFA members who are experts in specific topics
will conduct some of the interviews, as they will be able to ask
questions of greatest relevance to Fee-Only advisors.
Rest of the Issue
While the Q&A is our featured article in this issue of the
Advisor, I’m anticipating that readers will find a great deal of
value in the additional articles, too. John Ryan and Mark Desiderio
contributed an article about how to evaluate long-term disability
insurance offers. NAPFA member Steven Wightman shared his
fascinating perspective on the similarities between being a financial
advisor and a pilot (in his case, a pilot who is aiming to break a
few world records to his credit). Columnist and NAPFA member
Jennifer Lazarus tapped into the experience of numerous NAPFA
members on how to get the most out of a client advisory board.
Enjoy the issue and feel welcome to contact me at any time to
suggest a candidate for a feature Q&A.
CEO
Ellen Turf turfe@napfa.org
sTaff
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
Business Development and Membership
Nancy Hradsky hradskyn@napfa.org
Professional Growth and Education
Robin Gemeinhardt gemeinhardtr@napfa.org
Communications
Benjamin Lewis 301.963.7555 ben@bdlpr.com
Public Policy and Advocacy
Karen Nystrom nystromk@napfa.org
Executive Assistant to CEO
Mardi Lee leem@napfa.org
NAPFA Advisor Production
Eric Georgevich ericgeorgevich@gmail.com
Accounting
Laura Maddalone maddalonel@napfa.org
Membership Assistant
Cindy Ganze ganzec@napfa.org
Editorial Assistant
Christopher Hale cghale@gmail.com
Education Assistant
Rachel Gusek gusekr@napfa.org
NCEF Coordinator
Lisa Lenczewski lisal@napfa.org
The NAPFA Advisor Magazine issue #10 October 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.
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Table of contents
october 2012 vol. 29, issue 10
Doing Business on a Handshake.
Columnist Richard Sincere discusses
issues of trust that all entrepreneurs
must face. Pages 10-11.
departments
Keeping Up with Napfa 8
Eye on... Financial Planning 34
Q&A with Kelli Hueler. In an exclusive
interview, Kelli Hueler, CEO of Hueler
Companies, explains why advisors
should consider using low-cost annuities
to help clients achieve secure retirement
income, and how access to annuities is
becoming a key part of financial firms’
strategies to capture 401(k) rollover
dollars. Pages 14-18.
in the Limelight 36
features
staying in the game 10
Doing Business on a Handshake
industry Q&a 14
Kelli Hueler, President and CEO, Hueler Companies
How to Check Up on Your Financial Advisor
By Alan Moore, CFP ® , MS
When using FINRA BrokerCheck, look at the following
categories:
Part 1A, Item 5 states how many employees the firm has, the
types of clients it works with, and how fees are charged. This is a
great way to double-check a prospective advisor because if they
say they are fee-only, but this site says they accept commissions,
you probably want to move on.
Part 1A, Item 6 identifies if the advisor or firm has any other
business activities, such as being a real estate agent, attorney,
or broker. This will give you insight into potential conflicts of
interest.
Part 1A, Item 11 states if the advisor or firm has had any past
legal troubles.
practice profile: 22
Steven Podnos, Wealth Care LLC
insurance 26
Top 10 Mistakes Advisors Make When
Evaluating Disability Insurance
columns
Message from the Editor 3
A New Feature
Letter from the chair 6
A Time of Change
The Efficient planner 30
Client Advisory Boards
Part 2, look at the “Brochures” on the left-hand menu. The
brochure is a relatively new document that is mandatory for all
advisors. It lays out in common language how the firm operates,
how it charges, conflicts of interest, and more. Fee-based advisors
will have blue links for “Broker” and “Investment Adviser Rep.”
Click on the Broker link and take a look at the right-hand side for
the question, “Are there events disclosed about this broker?” If
the answer is “Yes,” click “Get Detailed Report” to learn more. Napfa advisor sEpTEMBEr 2012 5

Lauren Locker, Napfa chair
a Time of change
Human nature prevents us from
accepting change with open arms.
Change involves a modification, a
challenge to the status quo, a shift in familiar
patterns of thinking. It causes us to alter our
sense of order and, in doing so, to construct a
new, and hopefully improved, reality.
As financial planners, we expect change—
at least when it happens to our clients. Part of our professional
obligation involves anticipating and predicting certain changes
that we know will occur at some point in our clients’ lives. We
often act as agents of change for our clients, as we point them in
new directions and ask them to adopt more rational and profitable
methods of dealing with their finances.
In our own professional lives, however, change might not
be a welcomed visitor. Solo practitioners, in particular, may see
little reason to change “the way we’ve done it” until there is no
other alternative. Larger firms can be notorious for their adoption
of “group think” as a way of maintaining stasis. We’d all be wise
to keep in mind that the definition of stasis is a state of stability
in which all forces are equal and opposing, therefore cancelling
each other out!
NAPFA is poised to embark on a period of change, some of
which has been motivated by external forces and some of which
has been internally fermented.
Internally, our method of delivering education to our
membership must be transformed, due to increased competition
from providers and a decrease in conference attendance. Online
learning is fast becoming an appealing alternative to brickand-mortar
conferences. Our technological platforms need to
constantly evolve to keep NAPFA on the cutting edge. We must
implement our Grand Goal in ways that will ensure that we
continue to attract and maintain members.
Externally, we are facing the possible imposition of farreaching
new federal regulations. While the version proposed
by U.S. Rep. Maxine Waters (D-CA) is more palatable and in
line with our fiduciary standard, it will nevertheless affect our
practices in ways we can only imagine. A presidential election is
less than a month away, bringing with it uncertainty in the market
and the economy. These are just a few of the outside influences
that are causing NAPFA and its members to need to envision and
implement new versions of our practices and our organization as
a whole.
Heraclitus said, “There is nothing constant except change.”
Gandhi called on us to be the change we wish to see in the
world. Margaret Mead believed that a small group of thoughtful
people could change the world. Winston Churchill told us that
to improve is to change, and to be perfect is to change often. All
these great minds must be on to something.
Sincerely,
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.
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 ocToBEr 2012
Dana Pingenot, CFP ®
Dallas, TX
dana.pingenot@napfa.org
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Keeping Up With NAPFA
Midwest Region Offers
Membership Incentive
For the second consecutive year,
the Midwest Region is offering a $200
incentive for new NAPFA members. Any
newly accepted advisor who applied for
NAPFA membership between Dec. 1,
2012 and Feb. 28, 2013 in the Midwest
Region will receive a discount of $200 on
attendance for NAPFA’s 2013 National
Conference in Las Vegas.
“This program was popular last year,
so we’re repeating it. The idea is not only
to encourage NAPFA membership, but to
get those new members quickly involved
in our educational events,” said Jennifer
Sanchez, a Midwest Region board member
who is in charge of membership.
NAPFA Genesis Rolls Out
New Progr ams
NAPFA Genesis is finding new
ways to support young advisors, build
links between young advisors and more
experienced planners, and even potentially
attract young planners to NAPFA.
On Nov. 9, NAPFA Genesis board
members will participate in a virtual career
fair being organized by InvestmentNews
magazine. “It’s going to be interesting
because broker-dealers will be participating
at the career fair, too,” said David Grant,
chair of NAPFA Genesis. “We’ll be in a
virtual booth right next to a broker-dealer
that’s trying to hire these students and
new planners, and we’ll be offering a
very different, alternative career path. I’m
excited about the event, and I hope we can
open some eyes about Fee-Only planning.”
Meanwhile, Genesis recently received
funding approval from the NAPFA National
Board for a scholarship program. Beginning
in 2013, Genesis will offer scholarships to
cover the cost of taking the CFP ® exam
(currently $600) for candidates who pass
the exam. At least two scholarships will be
awarded, and perhaps as many as four.
Grant said that about half of Genesis
members are students or para-planners
(NAPFA Provisional Members), and most
of them are working towards their CFP.
“We know that a lot of students don’t have
the resources for the cost to study for and
take the CFP exam. Some para-planners
will get reimbursed by their employers,
but for others, the costs are still an issue,”
said Grant. “The scholarships can ease the
burden.”
Also, the Genesis mentoring program
is doing well about six months after
its inception, Grant added. To date, 10
Genesis members with at least three years
of advisor experience are mentoring
less-experienced Genesis members. In
addition, more than a dozen other NAPFA
members have indicated that they would
be willing to act as mentors to Genesis
members who want to learn how to start
and run a financial planning firm. “This
is a great chance for young advisors who
have an ownership mentality,” said Grant.
NAPFA Firms Make
AdvisorOne List
Twenty NAPFA member firms were
ranked in the Top 100 Wealth Managers
in 2012 by AdvisorOne.com. The list is
ranked by AUM per-client. Highest on the
list of NAPFA firms was WMS Partners,
LLC (Timothy Chase and Martin Eby),
which came in 33rd with $6.2 million
AUM per client. Other NAPFA firms, in
descending order of per-client AUM, were
Abacus Planning Group (Cheryl Holland
and seven Corporate Professional members),
Hewins Financial Advisors (Karl Schwartz),
Bingham, Osborn & Scarborough (Kevin
Dorwin and Clayton Ernst), Homrich Berg
(Andrew Berg, Tony Guinta and seven
Corporate Members), Trinity Financial
Advisors (Ellen Dowling, Nancy Ladd
& John Wimbiscus), Quadrant Capital
Management (Jeffrey Fisher & James
Kearney), JMG Financial Group (David
Morgan, Jason O'Hallen, Michelle Rozsypal,
and 15 Corporate Professionals), Budros,
Ruhlin & Roe (James Budros, Peggy Ruhlin,
and Corporate Professionals), RMB Capital
Management (Seth Davis), Balasa Dinverno
Foltz LLC (Armond Dinverno), Resource
Management, Inc. (Michael Zabalaoui),
Dowling & Yahnkee (Mark Dowling),
Hogan Financial Management (Paula
Hogan), The Monitor Group, Brightworth
(Lisa Brown, Chris Dardaman, Annika
Ferris, Ray Padron, David Polstra, and two
Corporate Professionals), Joel Isaacson
& Co. (Stanley Altmark, Joel Isaacson,
Michael O’Brien, and Matthew Rapoport),
Loretta Nolan Associates (Loretta Nolan),
Integris Wealth Management (Gifford
Lehman), and Briaud Financial Advisors
(Janet Briaud, Natalie Pine, Roger Pine,
Peggy Sherman, and three Corporate
Professionals).
At the NAPFA West Conference in Portland, OR, NAPFA member Joan Parker led
early-morning walks in Washington Park. Joining her one day were (left to right) Jeff
Daniher, William “Ike” Eichenberger, and Bill Bengen. For advisors seeking to add to their
knowledge and/or earn continuing education credits, recordings of conference sessions can
be purchased on NAPFA’s website.
8
Napfa Advisor October 2012

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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 each category receive 5 stars,
the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. An overall
rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar
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
each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10%
receive 1 star. An overall rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year
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Napfa Advisor SEPTEMBER 2012 9

Staying in the Game
By Richard Sincere
Doing Business on a Handshake
My wife Deb and I spent a late-
September Saturday in a far
north suburb of Illinois. This
area is known for its farmland and horses,
and as soon as you get off the interstate,
you immediately start to breathe easier.
Sadly, a massive outlet shopping center
has been built among the beautiful
pastures, but most of the area is still
picturesque, long on land and short on
buildings.
While I wish our purpose had been a
picnic or horseback riding, it actually was
to visit a nursery and select some trees for
our property. We have decided that it’s time
to do some landscaping, which we hope
in turn will encourage us to spend more
time in our yard (our landscaper says his
goal is to make it so nice that we’ll never
go to New Hampshire). I wish I could say
that my role at the nursery was to offer my
opinion about which species we liked best,
and then which of those trees looked the
nicest, but I realized that I had nothing to
contribute. Those decisions were left to my
wife and to Mike, landscape designer and
owner of the nursery, while I was relegated
to enjoying the crisp fall air and surveying
the nursery’s many acres.
Given my usual intellectual curiosity,
I began asking Mike about his business.
I was curious about why he started a
nursery and how he found the land. Within
minutes, he was telling me in great length
about how he had met the architect who
lives in the house adjacent to his nursery
and how he approached him about leasing
the land so he could start his own nursery.
The architect initially said no, but after
further consideration decided that he
could benefit by claiming the land for
agricultural use, which would reduce his
taxes significantly. The landowner’s only
caveat was that no lawyers be involved
and that it would be based on a piece of
paper and a handshake.
Mike first consulted an attorney who
crafted a document full of legalese to protect
Mike from what he believed was a deal
destined to fail. Mike knew he couldn’t
present this document to the architect, so
he decided to trust his gut. Mike wrote up
the terms on a piece of paper. Eight years
later, he is extremely proud of the fact that
he built a profitable business based on a
“gentlemen’s agreement” that is still in force.
Despite my belief in the goodness of
people, my cynicism led to my next line of
inquiry: What would happen when Mike
decided to sell the nursery? He smilingly
admitted that he had no one to hand it down
to, that he had more than enough money to
be satisfied, and that in six years he wanted
to retire and move to Italy. I thought that
was a nice position to be in but not really
relevant to most small-business owners—
people who, in my experience, are
dependent on funding their retirement with
the income from or sale of their business.
Yet, based on our conversation, I
felt that Mike was not a naïve person; he
was, in fact, an intelligent entrepreneur
who had figured out how to balance his
financial needs with his quality of life. I’m
sure he anticipates being paid some price
when he sells his business (despite owning
only the plantings on the land but not the
land itself), but that doesn’t diminish his
enjoyment of or passion for his business.
He figures that while he may not be
maximizing the profitability of a nursery
business (as business school teaches us to
do), he’ll get a fair price that will allow
him to at least feel good about what he
created.
It’s interesting to think about how
different entrepreneurs define their quality
of life and come to terms with what is
a fair deal. Since Mike and his wife are
financially comfortable and none of their
family or friends will be dependent on
making a living from the business once
he leaves, the decision is a little easier.
However most entrepreneurs (me included)
worry about our employees, family, and/
or heirs who are cheering for our success
and also are successors to our business. My
guess is that Mike’s nursery has a number
of employees who expect to continue
working for the next owner.
My most important takeaway from the
discussion was Mike’s attitude: comfort
about what he’s doing and appreciation
for his business. Mike was the epitome of
someone who was more concerned about
the quality of his product than his profit
margin.
Protecting Yourself as
an Entrepreneur
You would think that Mike’s lack of
concern about maximizing profits would
make running his business relatively stressfree.
After all, if he is willing to walk away
from his nursery in six years, why would
he be concerned about a customer taking
advantage of him? But he described a
recent situation with a customer who asked
him to develop a detailed landscaping plan
for her house. He went to great lengths to
diagram the irrigation system, stonework,
trees, flowers, and so on—really making her
home a showpiece. After his presentation,
the customer began hemming and hawing
and asked him to leave the plans for her to
review. He flatly told her no.
Part of being an entrepreneur is
protecting yourself from being taken
advantage of by your customers. We must
trust our customers and clients. But when
our antenna goes up and we feel someone
is trying to take advantage of us, we have
to draw a line in the sand and not allow it to
be crossed. As soon as Mike thought he was
going to be exploited, he pretty much told
his customer that she would have to pay
for his drawings and that he wouldn’t do
anything more until he was compensated.
He wants her and everyone else to respect
that his time is worth as much as or more
than the products he sells.
In contrast, when Deb and I were at
the nursery, Mike gave us all the designs
he had sketched and itemized. He and Deb
10
Napfa Advisor October 2012

Staying in the Game
spent hours poring over the details, such as
which tree grew better in the shade or sun,
how tall each grew, and how each face of
the house might have a different theme for
variety and mood. Having worked with us
before on a small project, he knew that Deb
was totally engaged and that she wasn’t
going to take his plans and use them with
someone else.
My belief is that entrepreneurs have a
sixth sense to size up a client and decide who
is a straight shooter and who isn’t. Being an
entrepreneur means having some comfort
that your judgment is right more often than
not. If we don’t trust our judgment, then
there is no way we can run a business.
That means that we must excel in our area
of expertise, but it also means that we can
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Perkins Discovery Fund 04/09/98
DJ Wilshire U.S. Micro-Cap Index
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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
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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%
size up people a little better than most. If
we don’t, then a lot of our handshake deals
would be relegated to attorneys. Certainly,
there are plenty of firms that work with
lawyers in tow, which is fine for them. But
we smaller entrepreneurial firms must start
with the belief that when a potential client
meets with us, that person is being honest
with us. If we have the slightest inkling that
this is not the case, we will subconsciously
try to sabotage the meeting and discourage
the deal.
My wife and I are giving Mike our
business, and we wouldn’t think of going
to someone else. We believe that we are
getting his substantial expertise and that
he is providing great value for what we’ll
receive.
While my first impression was that
Mike wouldn’t ever make it in the financial
services industry, I realize now that our
businesses actually work the same way.
When we sit down with a prospect, we
judge how easy or hard this person will
be as a client. We try to decide if we will
have fun working together and if we will
learn something from each other. But, most
importantly, we are trying to decide if the
exchange of dollars for services will be a
fair deal. An aggravating client needs to be
charged more than someone who is easy
to work with, or maybe rejected as a client
altogether.
At the end of the day, all relationships
are built on trust. When you decide to
voluntarily engage in a working relationship,
it must have a strong element of trust. Doing
deals in this scenario should allow you to
put the contract in a file and never have to
look at it for years. When the relationship is
forced, then discomfort often follows, and
the contract has to be consulted regularly
to protect oneself. Mike understands that if
he is looking at the contract all the time, he
has much bigger problems than trying to run
his day-to-day his operations. It’s not the
handshake he trusts; it’s the person on the
other end of the handshake.
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 Advisor SEPTEMBER 2012 11

Invest wisely.
PERFORMANCE SUMMARY (SIRRX)
SIERRA CORE RETIREMENT FUND FROM INCEPTION 12/24/07 TO 8/31/12
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 6/30/2012
Latest Four Years Since Inception 12/24/2007
Cumulative* Annualized Cumulative* Annualized
Sierra Core Retirement
Fund Class R
+3.19% +2.66% +44.95% +9.73 +45.61% +8.67%
S & P 500* +9.49% +5.45% +16.36 +3.86% +0.60 +0.13%
“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 855-879-4075 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
Napfa Advisor October 2012

ASSET ALLOCATION AS OF AUGUST 31, 2012*
Currency
4%
Other
Low-Volatility
Funds
4%
Temporary
Havens**
11%
High Yield Corporate
Bond Funds
10%
Other
Bond Funds
71%
*NOTE: Holdings can change at any time without notice.
**Money Market & ultra short bond funds.
PERFORMANCE BY QUARTER (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%
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 Net Expense Ratio is the Total Annual Fund Operating expenses less fees and expenses, of the underlying funds, which are estimated at 0.69%
per year. The Fund’s investment adviser has voluntarily contracted to reduce its fees and/or absorb expenses until at least February 28, 2013 under
certain circumstances. The Fund invests in mutual funds and ETFs (“underlying funds”). The Fund indirectly bears investment management fees 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 1-855-879-4075. The Sierra Core Retirement Fund is
distributed by Northern Lights Distributors, LLC, Member FINRA.
1375-NLD-9/7/2012
Napfa Advisor SEPTEMBER 2012 13

industry Leader interview
By Kevin Adler
Q&a with Kelli hueler
Kelli Hueler is president and CEO of
Hueler Companies and developer
of Income Solutions ® , an online
platform for analyzing and purchasing
low-cost annuities. This platform was the
first of its kind to offer NAPFA advisors
annuities with no commissions, level fees
across multiple annuity providers, and full
disclosure of distributor fees.
In this Q&A, Hueler discusses how to
change the mindset of financial advisors
about annuities and the distribution of
annuity products through 401(k) providers.
She explains why annuities should be part
of a comprehensive financial plan and how
they can be incorporated.
Question: Just days before we conducted
this Q&A, your company announced a new
partnership with the Southwest Airlines
Pilots’ Association (SWAPA) that will give
its members access to the Hueler Income
Solutions ® platform for its 401(k) plan.
The SWAPA plan has about $2.4 billion in
assets. What does this partnership signify
about the interest in annuities in general?
Hueler: Southwest Airlines pilots have
a terrific 401(k) plan, which BrightScope
ranked as the top defined contribution
plan in the country. However, members
don’t have a traditional pension. SWAPA
leadership is very aware that its members
will need to turn a portion of their
retirement savings into lifetime income,
or create a “paycheck for life.” This new
program allows pilots who are approaching
retirement to convert some of their assets
into a secure retirement income stream.
Most workers in America are confronting
this same challenge.
SWAPA also wanted a low-cost
arrangement with easy-to-understand
choices for building retirement income.
This is an important part of what the
Income Solutions ® platform offers to
individuals. Members can also talk with a
qualified non-commissioned professional
as they work through decisions about how
much to annuitize, when to annuitize,
and so on. The platform for SWAPA will
initially include fixed deferred, single
premium immediate, and longevity annuity
offerings. Hueler believes 401(k) plans will
continue to add new product alternatives,
and our platform supports this approach.
Low-cost annuity products serve as
the baseline for pension-type income or
as the foundation for a secure retirement
income stream. However, it’s not the only
solution for retirement; it is only part of
the answer. As participants make decisions
about retirement, we believe advisors play
a very important role in constructing and
implementing a comprehensive financial
plan. In fact, our staff will ask an individual
if he or she has an advisor, and we will
encourage them to get objective financial
advice. We often refer people to NAPFA’s
website to help them find a Fee-Only
advisor.
Question: You believe that advisors can
work with clients as they transition into the
spend-down phase to blend annuities into
the retirement income plan. But how do
advisors feel about annuities?
Hueler: Some advisors have already
successfully incorporated annuities into
their practices, and others are climbing the
learning curve and are starting to embrace
annuities. Unfortunately, we still see a large
number of advisors who are uncomfortable.
We struggle at times to break through the
traditional viewpoint that an annuity is
just giving all of your client’s money to
an insurance company, rather than seeing
the value of transferring certain risk—
particularly longevity risk—to an insurer.
There’s a perception that annuitization
is a bad deal. And sometimes it is. There are
well-known problems with how annuities
have been packaged and sold to individuals,
but this clouds the picture today. Advisors
are stuck in the traditional risk-reward,
Efficient Frontier paradigm that doesn’t
include helping clients understand how
to take advantage of risk transfer and the
benefits low-cost annuities have to offer.
annuities can be used
effectively where and
when it makes sense to
stabilize income, guard
against market volatility,
and/or transfer
longevity and other
risks. The key is to pay for
only those features that
are needed.
Question: Tell us about this new flexible
approach or the new ways of using
traditional annuity tools.
Hueler: An annuity has certain
parameters in terms of to whom and how
it pays income. These parameters include
single life only or single life with a period
of certain payments if you die earlier than
anticipated; joint life for yourself and
partner; fixed guaranteed income increase
per year or payments that move with
inflation; and so on. The annuity terms can
be structured to fit an individual’s personal
circumstances.
continued on page 16
14
Napfa advisor ocToBEr 2012

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Napfa advisor sEpTEMBEr 2012 15

Industry Leader Interview
Continued from page 14
Annuities can be used effectively
where and when it makes sense to stabilize
income, guard against market volatility,
and/or transfer longevity and other risks.
The key is to pay for only those features
that are needed. Strip out the bells and
whistles that carry significant cost and are
not of value.
This is where the Income Solutions ®
platform can be a very effective tool for
non-commissioned advisors. The quote
tool is easy to use and allows advisors
to quickly customize every annuity
quote. An advisor can select only those
features she wants to consider and can run
multiple scenarios. The quotes are realtime
and are presented in a standardized
grid that facilitates easy comparisons and
presentation to clients. The distribution
cost is lower than other available channels,
is fully disclosed, and is level across
all insurance companies. Every quote
request is submitted to insurers through
an automated competitive-auction format
among multiple insurers. Clients can be
confident that their advisor gave them
access to the best available market price
with the highest available monthly income
for the features they selected.
Question: With the Income Solutions ®
platform, a person can buy a low-cost
annuity. Does that complement—or even
replace—the comprehensive financial plan
that a NAPFA member would produce and
manage?
Hueler: From our perspective,
successful advisors use annuities as only
one component of a comprehensive
financial plan, and they educate clients
about why they are being used. They
understand that annuities do not require
locking up all of a client’s money, or even
a lot of it. The annuities used are low-cost,
super-streamlined products that can be
bought in small increments. They fit in
when a client needs it, whether that’s in
their early 60s or late in life. They empower
advisors by giving them a tool to preserve
clients’ income and protect their wealth.
It’s about building a personal pension.
Some money will be annuitized, some will
be in stocks, some in CDs, and so on. Every
financial advisor needs to know how to
build these pension-like income streams for
their clients. Annuities can offer real value
in terms of risk transfer and secure income.
We even see annuities as a complement
to bond ladders that many advisors use.
The annuities have advantages such as
tax deferral, inflation protection that’s not
available in corporate bonds, and an income
stream that lasts a lifetime.
From our
perspective,
successful
advisors use
annuities
as only one
component
of a comprehensive
financial plan, and they
educate clients about
why they are being used.
Question: When it’s put in those terms, it
seems like a logical extension of what a
comprehensive advisor does. But yet, it
still seems like it might require a change in
mindset for an advisor, or at least a change
in terminology.
Hueler: Yes, it is a logical extension
for some advisors and, hopefully, for more
in the future. We see advisors becoming
“income security specialists,” and annuities
are just part of that equation. We believe
that advisors can charge for their advice
when they are providing income counseling
as one of their services. From my
perspective, that’s exactly what they should
be doing for clients.
The advisors we see who are
successful look at a client’s overall picture,
and they do not view advice as a single
event. They build a ladder of income for a
client’s retirement and educate them about
the process of building income. This might
take 10 years or more, maybe by allocating
some income each year into an annuity for
the retirement income bucket. The point is
that advisors should have a fee model that
compensates them for what, we believe,
is an extremely important service and
may be what actually determines whether
or not clients will have sufficient assets
to maintain their standard of living in
retirement.
Question: Earlier you mentioned the idea
of not locking up all of a client’s money in
an annuity. How much are you suggesting
should be annuitized?
Hueler: Obviously, it’s always
an individual decision, based on many
factors. We have data on annuity purchases
made through Income Solutions ® , and
it contradicts many assumptions that
people have. First, people are not overannuitizing,
despite claims that they will.
They annuitize, on average, about 25
percent of their assets, and they see this as
income replacement for their retirement.
Second, they are purchasing annuities in
the active-retirement phase of their lives,
their 60s and 70s, and not much later, as
is often promoted when plan advisors are
conflicted.
Question: What else have you learned
about people’s tendencies when buying
annuities?
Hueler: Individuals who buy annuities
through us without advisors typically buy
the highest level of nominal income they
can purchase today. That is, they don’t seek
inflation protection. Financial advisors
are much more astute about the impact of
inflation, and they will seek annuities that
protect against it. This is very important.
When we started the Income Solutions ®
platform in 2004, some plan sponsor
clients had very generous pensions for
their retirees. These sponsors often told us
that they believed their participants would
not need much annuitization because the
pensions were so generous. But what we
learned after folks had retired is that they
would buy annuities for additional income,
and they needed inflation protection
because their costs such as healthcare had
gone up more than they expected.
Continued on page 18
16
Napfa Advisor October 2012

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Napfa Advisor SEPTEMBER 2012 17

Industry Leader Interview
Continued from page 16
Question: It also seems that, as longevity
increases, the challenge of inflation gets
worse. Combine that with being fearful
about investing in a volatile stock market,
and you’ve got problems.
Hueler: People don’t become
confident investors until their basic needs
are met. People who are not fearful are
better investors, and those investors will
have better prospects for the long term. To
the extent an annuity provides underlying
security, it can make people more confident
investors with the rest of their assets.
The other issue that one of our plan
sponsor clients talks about is the “miser
effect.” It’s the fear people have that they
won’t be able to maintain their lifestyle
in retirement and that their accumulated
wealth won’t last. Because of this, they
don’t live the retirement they could live.
Having that built-in income floor will give
them the confidence and freedom to do
great things with the rest of their lives.
Question: Moving in another direction,
let’s talk about annuities from a perspective
of independent RIAs. Advisors are
constantly hearing that they are in a fight
with other types of financial advisors
for 401(k) rollover assets. How does the
marketing of annuities today fit into the
rollover environment?
Hueler: This is something we’ve
studied and addressed in a paper I cowrote
with Anna Rappaport, FSA,
MAAA, called “The Role of Guidance in
the Annuity Decision-making Process,”
that was presented earlier this year at the
Pension Research Council Symposium
hosted by the Wharton School. Some of
the information in the paper was presented
again before the ERISA Advisory Council
in June.
We found that some asset gatherers and
certain retirement plan administrators have
created clear barriers to the use of low-cost
annuities. The plan administration business
is not profitable based on administrative
fees alone; instead, success depends on
administrators earning fees for a variety of
other services. Sometimes this occurs in
conjunction with advice providers. These
advice providers offer managed accounts
and reallocation services for 50 or 60 basis
points per year and facilitate only late-inlife
deferred annuities.
When an advisor’s and/or
administrator’s revenue model is dependent
on keeping assets in the managed account
until participants reach age 80 to 85 and/or
selling retail-priced annuities in lieu of lowcost
alternatives, this creates a dangerous
conflict of interest. What we see in these
situations is participants being given the
advice that they should not annuitize until
late in life, even though purchase data
clearly shows people’s preference for
partial annuitization throughout their 60s
and 70s.
When a plan administrator offers retail
annuities rather than low-cost alternatives,
data tells us that participants are being
dissuaded from rolling over to the low-cost
programs offered by plan sponsors or other
distributors. Instead, participants are being
encouraged to buy higher-margin annuity
products that benefit the administrator
rather than the individual.
Employers want to look out for their
employees’ interests, but they might
not be aware of the agenda of their plan
administrator and/or advice provider.
Here’s where NAPFA members come in,
because they are objective and are experts
at differentiating between investment
options that are in the best interest of
their clients, instead of in the interests
of distributors or manufacturers. The
other difference is that a fiduciary RIA
is not trying to capture rollover dollars
through financial products. The objective
advisor’s job is to help the client use his
or her resources to the greatest advantage.
Sometimes that is under the advisor’s
management, and sometimes it includes
going elsewhere for financial products.
We have been very fortunate to
partner with Vanguard in delivering lowcost
annuity alternatives to their clients.
Vanguard’s Annuity Access program that
is powered by Income Solutions ® not only
makes low-cost annuitization available but
encourages staged or partial annuitization
that can be integrated with other lifetime
income options. Vanguard also makes the
program available to advisors, and they
have licensed professionals available to
assist both advisors and individuals.
Question: Given consumers’ interest in
secure income, do you think annuities
will become more important in the 401(k)
rollover world?
Hueler: Yes. Look at the trend. A
number of financial services firms and
insurance companies are aggressively
selling retirement income services as a very
effective means of capturing IRA rollover
assets. Their pitch is “retirement income,”
and annuitization is a key aspect of that
pitch.
My question is where are advisors
going to be if they do not have the
knowledge and tools to compete? An
independent advisor, at a minimum, will
have to rethink his or her strategy around
building retirement income and what
services are being provided to clients.
To be successful, advisors will have
to show that they are knowledgeable,
independent, and have access to low-cost
lifetime income products. To combat the
flashy advertisements and glossy product
brochures, independent advisors need
to demonstrate that, with their objective
advice and cost-effective retirement income
strategies, a better outcome can be created
for the client.
Question: Concluding observations?
Hueler: In investing, everything is
a tradeoff. If you strip off the labels from
the various retirement products and just
look at the underlying characteristics of
each—such as volatility, liquidity, security,
provider credit quality, cost and so on—
then you could really look at how the
individual product can work in a person’s
total portfolio. I believe that if you could
get to a place where labels weren’t the
focus, but rather product characteristics,
you would have advisors behaving
differently, and the simplicity of having
an annuity for some amount of baseline
income would be highly appealing.
18
Napfa Advisor October 2012

SENSABLEs
Napfa Advisor SEPTEMBER 2012 19

Financial Planning
marketfield
asset management
The Weekly Speculator
Authored September 20, 2012 by Michael Shaoul, Ph.D., Chairman of Marketfield Asset Management
2012 is quietly turning into a very good year for the US equity
market. With almost three quarters of the year in the books the SPX
index has risen 16.18% to reach 1461.05. If the index was to finish
the year exactly here this would qualify as the 2nd best performance
since 2003 and the 3rd best since 1999. If the current pace of gains
were to be continued through the 4th quarter the index would post a
gain of around 21%, which would just eclipse 1999 but still leave it
just behind 2003 and 2009.
However, the strong gains in these two years (26.67% and 23.45%)
were largely a reflection of the great destruction that took place in the
prior year (-23.37% in 2002 and -38.49% in 2008), whereas 2012
follows the statistical fluke of an exactly flat year in 2011 and two very
solid years before that. 2012 is therefore threatening to deliver something
we have not seen in over a decade, a gain of over 15% in the
middle of a strong multi-year rally, a matter of course for much of the
1980’s and 1990’s but something of a novelty following the US
equity market’s “lost decade”.
Of course nothing is guaranteed in financial markets and it may be
that the market has run ahead of itself, only to deliver a painful pullback
in the weeks ahead. We would allow for this as a possibility but
do not really expect thing to play out this way. The market was resilient
in the face of significant pressures this summer and as these have
receded and been replaced by generous additional liquidity provision
by the Federal Reserve Bank (FRB) and Bank of Japan (BOJ) and (finally)
a sensible mechanism for a “Eurofix” by the European Central Bank
(ECB) the pathway to higher equity prices would seem to be that
of least resistance, particularly though the end of the quarterly
allocation process.
Moreover, it is becoming increasingly clear to the global investor that
the US equity market represents leadership at the current time and it is
the domestically focused sectors within this market which have generally
offered the strongest returns in recent months. We would expect
the quarter end allocation process to reflect this understanding and to
continue to favor sectors such as homebuilding and retail.
Outside of the US we remain favorably disposed to domestic European
equities and skittish about emerging markets. The latter have clearly
benefited by the combination of the Eurofix and QE3. The former is
widely expected to ease economic pressures arising from a European
slowdown while the latter is expected to boost liquidity. In neither case
is the connection straightforward. Regarding Europe it has never been
clear that the sovereign debt crisis was behind much of the slowdown
in emerging markets which appears to be very domestic in nature.
Thus while a strong bounce in the Euro currency (EUR) may boost the
export data in certain countries (since these tend to be measured in
U.S. Dollar (USD) this is fairly likely to occur even with flat sales) the
problems facing a country such as China or Brazil go well beyond a
shortfall of European exports.
Regarding the liquidity route that could be taken from Quantitative
Easing (QE3) to emerging markets the most obvious connection runs
through the debt rather than the equity market. The former has
remained white hot throughout 2012 (somewhat to our surprise) but
may paradoxically now have to deal with a sustained rise in longer
term US treasury yields (as was the case with QE2), making emerging
markets a somewhat less inviting alternative. Unlike two years ago
when corporate news and economic data were reaching their peak we
expect both to deliver further disappointments for emerging market
20
Source: Bloomberg
Napfa Advisor October 2012

investors in the coming months. We therefore continue to treat the
current strong bounce as a bear market rally in emerging markets, that
should run its course sometime between now and the end of the year.
As we hint above our greatest concern regarding QE3 was that it was
not only unnecessary but may in the end prove to be positively harmful
to the long term fixed income marketplace. This is now very much
a victim of its own success since it is mathematically impossible for
future gains to match those of recent years unless we truly face an “end
of the world” type depression. Much more likely are extremely modest
returns from yields interspersed by capital losses from brief surges higher
in underlying rates. Furthermore the largesse of the FRB is likely to
be overwhelmed by the opportunism of corporate treasurers, with YTD
issuance of US corporate debt already reaching $1.059 trln, a record
for the 3rd week of September (see chart). The other big question is to
what extent does QE3 favor the commodity sector. Again this is a
much harder question to answer than it was in 2010, particularly in
the case of crude oil, where new supply poses much more of a threat
to high prices than it did two years ago. This week’s DOE inventory
data drove this home, reaching the highest September reading seen
on record at 367mln barrels and caused an immediate collapse in
crude’s price to below $92, wiping out most of August’s gains in the
process.
Gold on the other hand has fewer problems with inventory and is a
purermonetary play than crude (although not as pure as many would
claim). The metal has made us look somewhat foolish in recent weeks,
but still needs to push on above $1,800 to confirm its breakout. Even
if it were to do so, we would still prefer the less populate waters of the
US equity market, which has matched gold’s pace of gains since the
start of current bull market. Copper is somewhere between crude and
gold, and needs to hold onto its recent gains having finally broken out
of its multi-week straightjacket. ■
Michael Shaoul is Chairman of Marketfield Asset Management, Adviser to the Marketfield Fund (MFLDX). 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 Marketfield Gold Edition, a daily digest of commentaries like the one here, email info@sincereco.com to request a username and
password.
Represented by
Sincere&Co
www.sincereco.com
847.905.0225
292 Madison Avenue
14th Floor
New York NY, 10017
(212) 514-2350
www.marketfield.com
Napfa Advisor SEPTEMBER 2012 21

Practice Profile
By Bridget McCrea
Bridging the Gap Between
Medicine and Finance
Steven Podnos of Wealth Care LLC
One look at Steven Podnos, MD’s
weekly schedule and you might
get the urge to call him the Dr. Oz
of the Fee-Only financial planning world.
Not only is this principal of Merritt Island,
FL-based Wealth Care LLC a practicing
physician, but he’s also a member of the
U.S. Air Force Reserve—a commitment
that finds him spending about six weeks a
year on active duty. Much like Dr. Oz does
via his books and TV show, Podnos spends
a lot of time helping people achieve their
goals (on the financial front).
Odd as it may seem, Podnos doesn’t
consider his schedule to be particularly
jammed. He enjoys the time spent working
with his 85 planning clients, avoids hiring
employees, utilizes technology whenever
possible, and cringes when he thinks about
the 100-hour workweeks that he used to
put in as a full-time pulmonary critical
care physician. Podnos pulled those shifts
from 1986 until 2003, roughly one year
after opening the doors to Wealth Care.
Do the math, and you’ll see that Dr.
Podnos spent most of 2002 juggling a
nascent Fee-Only practice with a pretty
demanding job. “My kids were leaving
the house right around the time I started
my Fee-Only firm, so I had time on my
hands,” recalls Podnos. “Compared to
Getting Exposure
working 100-hour workweeks, my life is
actually a whole lot easier now.”
Bridging the Gap
Podnos began bridging the gap
between medicine and business in the
late-1990s when he participated in the
formation of a Hospitalist program
(physicians who do primarily hospital
inpatient work). In this effort, Podnos
found himself dealing regularly with the
hospital on financial matters. Interested
in learning more about business, he spent
several years earning an MBA. During the
same time, he continued to invest assets
for friends and family. The experience
drove Podnos to explore the financial
world even further and to eventually open
the doors to his advisory practice.
The epiphany came on the day that
Podnos was flipping through a trade
magazine and came upon an article about
Fee-Only planning. “I was instantly
intrigued,” he recalls. “I didn’t even know
something like that existed.”
A quick phone call to NAPFA put
Podnos in touch with an established local
planner, Dan Moisand, who provided
pointers and advice on how to earn the
CFP ® designation. Podnos’s first client
was his brother-in-law. Friends and family
followed, enabling the nascent planner to
build his practice via referral.
Three years into his financial planning
career, he was too busy to do both fulltime
medicine and financial planning.
“My doctor-partners were gracious enough
to let me ease away from medicine over a
period of years,” says Podnos.
Nonetheless, he has headed up the
intensive care unit at a community hospital
for the last three years on a part-time
basis. That and his role as an Air Force
Reserve physician require Podnos to keep
his medical skills updated.
Overcoming Prospects’
Initial Reluctance
Initially, some of his medical
colleagues were skeptical about hiring
Podnos as their financial advisor. “What
do you know that I don’t know about
financial planning?” was a common
question he received. Citing his
credentials was part of the solution, as was
satisfaction from his growing client base.
“It took a few years to overcome that
obstacle and the perception that I was
an ‘amateur’ in the planning field,” says
Podnos. Eventually, many of the skeptics
came around, and today, physicians,
Continued on page 24
Dr. Steven Podnos enjoys writing about financial matters.
Author of the self-published book Building And Preserving Your
Wealth: A Practical Guide To Financial Planning For Affluent
Investors, a financial columnist for his local newspaper, and a
regular resource for national newspapers and magazines, Podnos’s
knack for helping people make smart financial planning decisions
radiates well outside of the boundaries of his firm’s client base.
Working together with two other NAPFA members and an
estate planning attorney, Podnos has been writing roughly 12 to 14
articles per year for his local newspaper for the last seven years. He
also writes periodically for Medical Economics magazine. He shies
away from social media outlets like Twitter and Facebook, but he
does enjoy the credibility that his books and articles bring.
-Bridget McCrea
22
Napfa Advisor October 2012

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Napfa advisor sEpTEMBEr 2012 23

Practice Profile
Continued from page 22
dentists, and other medically related
professionals comprise about 50 percent of
Wealth Care’s client base.
At some point, Podnos was able to
turn his dual careers to his advantage
by leveraging his innate knowledge of
physician-related financial problems. “I
think I often have a shared understanding
of many of the problems and issues that
many of my client families encounter
at different stages of life,” he says.
“Having that firsthand knowledge helped
immensely.”
Physicians get a “bad rap” about
being poor investors and being easy
targets for financial manipulation,
Podnos says. But he understands its
roots. He believes that the nature of what
physicians do can leave them vulnerable.
“The medical world is one in which very
important decisions are made quickly,”
he says. “Also, there is the free exchange
of both important and confidential
information on a regular basis in the
process of taking care of patients.”
Podnos adds that many physicians
do not understand that the business
(especially financial business) world often
is focused on extracting maximum profits
from them. It can take a while to educate
them that it’s not a worldview that is
necessarily acting in their interest.
Asset protection is another key
concern for physicians because they tend
to have high incomes but exposure to
malpractice lawsuits. “There are some
natural holes in their asset protection
situations,” he explains. “Sometimes,
focusing on estate planning leaves assets
open to creditors.”
However, Podnos also works with
many non-medical families. “Non-medical
families have many of the same issues,
and I really enjoy the diversity of working
with people in many stages of life and
with different careers,” he adds. For
example, he looks closely at the liability
risks of non-medical clients who rent
properties or operate businesses.
When facing a challenging client
issue, one of the places that Podnos can
turn is NAPFA. As a member of a NAPFA
MIX group, he meets twice a year with
nine other planners (collectively known
as “The Bar”) to share insights, practice
Wealth Care LLC, at a Glance
Location: Merritt Island, FL
Website: www.WealthCareLLC.com
Year founded: 2002
Number of staff: None
Number of clients: 85
Amount of money under advisement: $130 million
Description of typical clients: 50 percent physicians and dentists; the
remainder are a mix of business owners and retirees.
Typical client needs: Simplification of their financial lives and investment
assistance.
Favorite financial planning website: Google Reader for financial news
(www.google.com/reader)
Favorite non-financial planning website: Belmont Club and
Instapundit blogs, Drudge report
Piece of advice to fellow NAPFA members: “Be very available to your
clients. All of my clients call me directly on my cell, and I get almost no abuse. Nothing
builds referrals like availability and having a strong service mentality. Also, offer night or
weekend service to busy clients. I do this and compensate by taking time off during the
week. It is much appreciated.”
management strategies, best practices, and
more. Group members also talk regularly
via phone and communicate by e-mail.
“It’s like being in a large, supportive
group, but without the formal business
ties,” says Podnos, “and it all germinated
from NAPFA.”
A Calculated Approach
Today, Podnos manages about $130
million for 85 families. While that seems
like a relatively large load for a solo
practitioner, he’s reluctant to hire an
employee. Credit the fact that he and his
medical partners oversaw more than 15
employees over a period of years as one
reason for his cautious approach. “I would
probably only have one or two employees,
which would be a disaster if they left or
didn’t work out,” he says.
He relies on mobile communications
and software like Morningstar Office (for
portfolio management and reports), Redtail
(for CRM), Laser App (for applications),
and SugarSync and Mozy (for backup and
syncing) to serve as his virtual assistants.
“Technology has made it easier than ever to
not have employees,” he says.
Pleased with the progress that he’s
made building his practice over the last
10 years, Podnos says he’ll be happy if
Wealth Care stays at its current size. “I
have enough business, I keep busy, and I
make a good living—what more can I ask
for?” he asks.
But then, he admits he does have
one possible change in mind, perhaps in
the next five years: a business partner.
“That would really just be to make my life
easier and balance the workload and client
management pieces out a bit. Otherwise,
things are great,” he says.
Author Bridget McCrea can be
reached at bridgetmc@earthlink.net.
24
Napfa Advisor October 2012

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Napfa Advisor SEPTEMBER 2012 25

insurance
By Mark desiderio and John ryan, cfp®
Top 10 Mistakes advisors Make When
Evaluating disability insurance
Understanding disability insurance
is a never-ending challenge.
Since Ryan Insurance Strategy
Consultants started in the disability
insurance industry in 1978, we’ve
analyzed an endless array of policy
options and innovations. We’ve worked
with Fee-Only advisors since 1983 (when
NAPFA was started), seeking costeffective,
secure solutions for protecting
individuals and families.
Below are 10 key mistakes that we
have seen advisors make when evaluating
disability insurance. We hope you learn
from these mistakes, as well as from our
tips for avoiding these errors.
Not seeing the shortcomings in
employer-provided group long-term
disability policies. We would all agree
that employer-provided long-term
disability (LTD) is a great value. Often,
however, the benefit is not adequate.
The most common LTD plans
provide 60-percent of monthly earnings
up to a specified maximum benefit,
usually with a cap of $10,000 per month.
This means a person making more than
$200,000 per year is likely restricted by
the maximum benefit and would receive
less than 60 percent income replacement.
If the benefit is paid by the employer, it’s
likely to be taxable and, therefore, the
percentage of income replacement is even
lower. If the definition of earnings does
not include bonus or commission income,
a client may discover at the time he
needs support that he is entitled to only a
fraction of his true income replacement.
Plus, clients forget that the policy is lost
if they leave their company.
In sum, to determine the real value
of a group LTD policy, an advisor must
look beyond the definitions of disability,
monthly benefit percentage, and the
maximum benefit, in order to review the
taxability options, define “earnings,” etc.
Not discussing multi-life premium
discounts, especially with female clients.
Most disability insurance companies offer
discounts if three or more people from the
same company purchase a policy at the
same time. The discount applies even if
the policies are for completely different
benefit amounts.
When calculating the final cost of
each policy, the companies usually rate
each plan based on unisex ratings, rather
than making distinctions based on gender.
They then provide a 10 percent to 20
percent discount off the unisex rating. The
end result is a 10-percent to 20-percent
discount to men. For woman, on the other
hand, the discount can be upwards of 40
percent off the “street rate.” This means
that a female business owner client can
purchase a policy for herself and two other
employees for substantially less than the
cost of a policy for just herself!
Asset Value of Asset Cost to Insure
Failing to put price in perspective.
Most people do not think twice about
insuring their large assets, such as a house,
cars, boat, etc. What people usually do not
realize is that their largest asset—the one
that allows them to obtain all of their other
assets—is the ability to earn a paycheck.
Below is a table to help put the price of
disability insurance into perspective.
Using Social Security and/
or worker’s compensation benefits
in disability retirement cash flow
projections. Per data compiled by the
Council for Disability Awareness, it
might not be a good idea to assume that
governmental aid will be available for
financial support in the case of a disability:
• 65 percent of initial SSDI claim
applications were denied in 2009.
• The average monthly benefit through
SSDA in June 2010 was $1,065 per
month ($1,190 for males and $928
for females).
• Eight percent of SSDI recipients
received less than $500/month, 52
percent received less than $1,000/
month, and 97 percent received less
than $2,000/month.
continued on page 28
Percent chance of
using coverage, for
person of age 35
House $300,000 $1,500/year 1:77
Car(s) $50,000 $2,000/year 1:88
Earnings $2,250,000(varies) $2,400/year 1:4
Source: Council for Disability Awareness
26
Napfa advisor ocToBEr 2012

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Napfa advisor sEpTEMBEr 2012 27

Insurance
Continued from page 26
• The average SSDI monthly benefit
payment was Fewer than five
percent of disabling accidents and
illnesses are work related. Workers’
compensation doesn’t cover nonwork
accidents and illnesses.
• Compensation from group LTD
plans are offset by any SSDI or
worker’s compensation benefits.
So, an advisor who is adding
SSDI/worker’s compensation and
group disability benefits might be
overestimating a client’s disability
retirement income.
The importance of “preunderwriting.”
Each disability insurance
company employs slightly different
underwriting guidelines, based on each
company’s specific claims experience.
This means that one company might view
a client’s health history or occupation
differently than another company and
make a more attractive offer. Also, the
guidelines are in constant flux. Knowing
what questions to ask a client before
obtaining quotes is imperative to getting
the client the best offer.
Underestimating the value of the
“any occupation” definition of disability
found in employer-sponsored group
plans. When we hear the term “any
occupation” tied to a disability insurance
policy, it is understandable to think the
worst—i.e., “any occupation” means that
if a person can do any job under the sun,
benefits will stop and the person will have
to go back to work. This is not the case,
however.
Most employer-sponsored disability
plans define “any occupation” as any
occupation that the claimant can reasonably
perform based on education, vocation,
or experience and in which he or she is
expected to earn more than 60 percent of
pre-disability earnings within one year. This
definition means the insurance company
will not terminate a claim because a
client is able to work in an unsuitable or
unreasonable occupation. However, some
group disability plans operate with tighter
restrictions, so care must be taken when
analyzing every policy.
Insuring retirement plan
contributions with the wrong policy.
Retirement plan contributions can be
insured against a disability in two ways.
The first is to include the contributions
with an income calculation, and
insure them with a standard disability
income policy. Using this strategy, the
contributions will be insured at about 20
percent of replacement. The second way
is to split the contributions from regular
income and insure them with a retirementprotection
disability policy. This strategy
allows for up to 100 percent of the
contributions to be insured.
There are pros and cons to each
strategy, but using a retirement-protection
policy will ensure that the client receives
the highest percentage of income
replacement possible.
Knowing when Lloyd’s of London
coverage makes the most sense. Lloyd’s
is a great option for insuring occupations
that the “domestic” carriers will not insure
or for people with health conditions that
would make them otherwise uninsurable.
Another Lloyd’s specialty is providing high
limits. If a high earner has the maximum
amount of coverage that he or she can
purchase from a domestic carrier, Lloyd’s
will offer additional coverage until all
coverage equals 65 percent of total income
replacement. Lloyd’s contracts and pricing
are also better than most advisors think.
Overlooking the importance of
business disability products for selfemployed
clients. Some of the revenue
that a business-owner client is generating
goes to pay his or her business expenses,
or the client might have to use some
business revenue to repay a business loan.
In both instances, disability policies can
meet those needs.
Business overhead expense disability
plans will pay a monthly benefit to the
business to help keep it running while the
owner is disabled. We usually recommend
that business owners insure at least
50 percent of their monthly expenses.
The cost of business overhead expense
disability is about one-third the cost of
personal disability plans. For covering
repayment of business loans, reducingterm
disability plans can do the trick; the
plans are flexible and can be tailored to
match the loan parameters.
Not understanding the unique
advantages of using a disability
insurance specialist as a resource. An
independent disability specialist will know
the questions to ask clients to determine
what type(s) of plan(s) and which
company will be the best fit. The specialist
will know the insurance companies,
their contracts, strengths, weaknesses,
underwriting guidelines, etc.
Conclusion
There is no need for an advisor or
an advisor’s clients to be intimidated by
disability insurance products. By working
with a true LTD specialist—a person
with the broad and deep knowledge
of insurance options—the process can
be easy, efficient, and cost-effective in
meeting the clients’ needs.
John Ryan, CFP ® , has been an
independent insurance broker since 1978,
and he focuses primarily on life, disability,
and long-term care insurance planning
for highly compensated professionals
and executives. To contact him at Ryan
Insurance Strategy Consultants, call
800.796.0909, ext. 102.
Mark Desiderio joined Ryan
Insurance in 2011 and evaluates the
disability and life insurance needs for
individuals and companies. He can be
contacted at 800.796.0909, ext. 103.
NAPFA ADVIS R
MAGAZINE
FOR SINGLE
ARTICLE
REPRINTS
Contact Ric Haines
Publisher & Director of
Magazine Oper ations
ric.haines@erhassoc.com
Phone: 732.920.4236
28
Napfa Advisor October 2012

NAPFA Consumer
Education Foundation
Promoting Consumer Financial Education
NAPFA Consumer Education Foundation’s mission
is to educate consumers about basic financial
NCEF FULLPAGE
matters and help them identify financial services
that are in their best interest.
The Foundation is developing a new website including a Consumer Help Tool
consumers can use to find just-in-time answers to real life financial questions.
This tool will focus on “Managing Life’s Financial Journey’s” and content selected for
inclusion in the Journey Project is best-in-class information, continuously being reviewed,
and refreshed and enhanced to remain current and relevant to consumers.
Speak with a NCEF Board of Trustee
to find out how you can help the mission.
NAPFA East Conference November 6 - 9, 2012
NCEF Hospitality Suite November 7th, 9:00 - 11:00 PM
Lisa Lenczewski
NCEF Coordinator
lisal@napfa.org
847.483.5400 Ext. 106
Napfa Advisor SEPTEMBER 2012 29

The Efficient Planner
by Jennifer Lazarus
Client Advisory Boards Can Generate
Great Questions and Valuable Feedback
In my last Efficient Planner column,
NAPFA advisors shared their
experiences about the logistics for
setting up and running a client advisory
board. Here, advisors share the questions
they have posed to the board members
and the valuable, actionable feedback they
have received.
Br anding
Giles Almond, whose firm, Matrix
Wealth Advisors (MWA), focuses on
physicians, uses questions such as these:
• What words come to mind when you
think about MWA as a brand?
• What words come to mind to
describe how you feel about MWA as
a brand?
• What services would an imaginary
world-class wealth management firm
dedicated to the needs of physicians
provide?
• What services would an imaginary
world-class wealth management firm
dedicated to the needs of physicians
provide that you perceive MWA
does not currently provide? How
important on a 1-10 scale is that
service, and would you be willing to
pay more to get it?
• What medical practice challenges
would an imaginary world-class
wealth management firm dedicated to
the needs of physicians assist with?
• How would you describe (frequency,
duration, agenda topics) the client
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review meeting at an imaginary
world-class wealth management firm
dedicated to the needs of physicians?
• Where do other medical
professionals go for financial
planning advice?
• What are the best ways to reach
physicians about MWA and its
specialty with physicians?
Perhaps Almond’s biggest revelation
from the client advisory board survey
was that his carefully honed specialty in
serving physicians had not truly sunk in
with his clients. “We learned that while
they knew we had a number of physicians
as clients, none of the board members
realized we specialize in this area,”
Almond said. “They suggested we tout the
number or percentage of physician clients
we serve, as we are marketing to other
physicians.”
Almond also learned from the board
members that “there is a grave concern
about the ‘Giles-centered’ practice, and
questions exist about my succession plan.
We learned that emergency access to me
or another advisor is seen as something
they expect, without paying more for it.”
Almond likens it to an “advisor on call”
for after-hours support.
Clients also indicated that they would
pay more for additional coordination of
their full financial picture beyond what
is currently provided—or perceived to be
provided. “For example, board members
[understood] that we provide referrals
for estate and tax matters, but they said
they would like an integrated approach
where we serve as quarterback and bring
other professional advisors into client
meetings to keep them from having to
translate information from one advisor
to another,” he said. “We learned that
the board members feel that their estate
and tax planning is disjointed from their
30
Napfa Advisor October 2012

The Efficient Planner
investment and wealth management
strategy. We have always felt they were
integrated, but, as they say, perception is
reality.”
Finally, the board members said that
more communication would be beneficial.
“We learned that they want an e-mail
before the client review meeting to lay
out the basic agenda to be discussed, as
they thought it might jog their memory of
things they need to ask. It would also help
them prepare for anything they might need
to bring,” said Almond. “Post-meeting,
they want a summary e-mail that spells out
the ‘to do’ items for the client and advisor,
along with some deadlines. And they
appeared to want as much help as possible
in reducing their own ‘to do’ lists and
shifting those duties to someone else.”
Strategic Direction
John Gugle, co-owner of Alpha
Financial Advisors, asked his board
members in 2008 for input about a key
strategic decision that the firm was
making. He was considering trying to
WARNING:
expand the firm’s client base to include
Americans working abroad, building on
his experience as an expatriate business
executive in Japan. “Since none of our
board members had worked overseas, and
American expatriates made up a small
percentage of our existing clients, our
board flatly rejected the idea. [They said]
it would be a lot of effort for an unknown
return,” Gugle said. “They also suggested
that it might stretch my work too thinly.
They argued that we needed to continue
building our local base of clients, who we
had received numerous referrals from. I
was a bit dejected when they did not
embrace my idea, but considering how
exciting things got in late 2008, I am very
thankful to have listened to them.”
But the story doesn’t end there. John’s
wife Ann joined the firm in 2010, bringing
her years as an expatriate executive in
Japan, too. John again asked the board
about the expansion idea. This time,
they gave it a thumbs-up, and the Gugles
have started to pursue expatriate clients.
(Their early efforts have been profiled in
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Ann Gugle’s addition to the firm
raised other issues on which the board
provided valuable advice. “The board
spent time probing Ann’s thoughts on how
the firm could excel and grow, essentially
vetting her to make sure she was the right
person for the job,” John said. “Again,
we are blessed to have critical thinkers
on our board; they point out weaknesses,
they tell us the hard truth, and they do
not sugarcoat anything. They asked some
tough questions of Ann, and in the end
they walked away satisfied knowing
that we would make a good strategic
partnership.”
Client Experience
Fox, Joss & Yankee (Reston, VA)
began using a client advisory board in
2009, not long after it was formed through
a partnership of experienced Fee-Only
advisors. Laurie Belew, a senior advisor
at the firm, reached out to the board with
inquiries about the client experience that
the firm was trying to build at the time.
“We identified each step of our clientfacing
process and tried to articulate how
the client felt before that experience,
how we/they want them to feel after
that experience, and how we could get
them there,” she said. “We were able to
clearly identify what our clients truly
value throughout the relationship. It was
invaluable to have the client advisory
board validate those ‘client-valued
outcomes.’”
As part of the process, the firm was
able to segment its client profile into three
groups. The board “helped us identify the
primary advice areas/needs of each group,
as well as to confirm that the services we
provide ensure client needs are being met
seamlessly,” she said.
My firm, Lazarus Financial Planning,
also has turned to our board for feedback
on a core aspect of the client experience.
Inspired by a Michael Kitces blog about
what financial planning would look like if
Steve Jobs designed it, I asked my board
these questions a few years ago: “What
pebbles exist, things that make the financial
planning process smooth and easy? What
Napfa Advisor SEPTEMBER 2012 31

The Efficient planner
boulders exist—obstacles, hurdles, things
that cause delay or inaction—when
beginning the financial planning process
and ongoing? If Steve Jobs had been a
planner, what would iFinancial Planning
look like: What would make it smooth,
intuitive, easy, and a joy?”
I wanted to hear about what parts
of my process made things easier for
them, because I wanted to be sure I
did not change those. But then we
spent some time brainstorming ways in
which I could change other processes
or could adopt new tools to make for a
better experience. Their feedback was
very rich, and I spent a few months
evaluating and integrating it. One
outcome: They asked me to adopt an
online tool to manage their to-do lists,
and I’ve since begun using Do.com.
Meanwhile, Bill Prewitt has asked his
board a series of questions about his firm’s
interactions with clients. “Sometimes,
valuable feedback is simply positive
feedback and the assurance that you do not
need to change anything,” he observed.
His questions over the years have
included:
• Is the staff accessible and responsive
in person, by phone, by e-mail?
• When a staff person you want to talk
to is not available, how do you feel
about talking to someone else?
• Would you like to get information
through By All Accounts? (Prewitt
added that this question “gave us an
opportunity to market it a little.”)
• How confident are you that your
records are kept confidential and
that your relationship is treated
confidentially?
• A staff member is attending
graduate school for two years and
will continue to manage portfolios.
What concerns come to mind and
how to best tell other clients about
this? (The firm received generally
positive feedback because board
members recognized that the
staffer’s training would ultimately
be beneficial to them; the only
concern they raised was about
accessibility to him if they had
questions.)
• At another time, Prewitt asked
board members for comments about
potential changes in appearance and
delivery (e-delivery) of quarterly
reports. “We showed report formats
side by side and let the board make
a choice,” he said. “They suggested
we limit additional changes so
clients could grow comfortable. On
a related topic, we asked if our new
format was clear, understandable,
timely, and accessible, and we
learned that they like the new reports
on Portfolio Services.”
Marketing
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Napfa advisor ocToBEr 2012

The Efficient planner
age of Prewitt’s clients is 64, so he asked
the board to weigh-in on his ideas for
attracting additional younger clients.
“They told us Facebook was okay for
event marketing but not to promote the
business. We also learned that we do not
have many heavy web users on our client
advisory board,” he said.
Fox, Joss & Yankee sought board
feedback when it rolled out a new website,
said Belew.
For Gugle, a similar question
revealed that some board members
did not even know that the firm had a
website. Once past that shock, Gugle said
that discussions produced very valuable
feedback. “Those who did [know we
had a website] wanted more,” he said.
“Our website was mostly a glorified
marketing brochure with no interaction.
They identified specific improvements,
including adding features such as a client
portal so that the site could become an
information-delivery vehicle.”
Client advisory board members
also alerted Gugle to how inundated
they were with paper: custodian reports,
confirmations, proxy documents, annual
reports, semi-annual reports, and so on.
They told Gugle that he was adding to the
problem, not fixing it. “Now, we send out
93 percent of our quarterly reports via our
website, eliminating most paper reports,”
he said. “That saves time and money, but
it also eliminates the paper burden that our
clients face. Our board helped us to frame
the discussion around what is best for the
client, which usually gets you to a better
outcome when you start that way.”
I’ve relied on my board for marketing
advice, too. In fact, in my first client
advisory board meeting, I asked for
feedback about five key pages in my
website redesign. I expected the feedback
to be quick because I felt good about my
site, and I’d prepared other agenda topics.
Despite their favorable impressions,
we spent the full meeting on those five
pages! Their feedback included small
but powerful comments such as “All my
friends know to look for Fee-Only—you
should put the NAPFA logo on every
page.”
My board also pointed out what
should have been obvious to me: Since my
practice focuses on socially responsible
investors, I need to state that on my home
page. They also told me I underplayed
what I do for them. I listened as they
described their experience (and frantically
typed their comments into my notes), then
wove their exact words into my website
text. It was invaluable to hear and see my
website through their lens.
Jennifer Lazarus is a NAPFA member
who runs her efficient practice in Durham,
NC. Please e-mail your column ideas to
Jennifer at jennifer@lazarusfp.com.
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Napfa advisor sEpTEMBEr 2012 33

Eye on... Financial Planning
By Steve Wightman
Down-to-Earth Financial Planning
from 19,000 Feet
Training pays: One afternoon
while flight training, I climbed
a Cessna 172 high over New
Hampshire’s wild mountains. Suddenly, the
engine began coughing, then sputtering.
Instinctively, I lowered the nose to avoid
a stall and spin—aka, a death spiral.
The airplane became a sputtering glider.
Immediately, I pulled the lever for
“carburetor heat” and proceeded through
my memorized emergency checklist:
1. Maintain control and airspeed,
2. Mixture rich,
3. Switch fuel tank vale selector to
“both,”
4. Switch magneto to “both,”
5. Identify a reachable emergency
landing point and head for it, and
6. Declare an emergency to air traffic
control—if time permits.
All of this was accomplished within
two minutes, though it seemed to me to
take forever. Item 5 was the hardest to
accomplish—steep slopes of windswept
mountains offered few landing options,
even though I knew I only needed a
headwind and a football field of open
space to land my small plane. I eagle-eyed
a farm field and began my emergency
landing procedures. With my heart
pounding, the engine’s sputtering abated—
full power returned, to my relief and that
of my passenger, who clearly understood
the implications. Fearing a recurrence, I
turned the nose south to my home base.
An alternate plan had saved the day.
Some time later, a 44-year-old
client called to thank me for “remaining
persistent” about her need to immediately
create an emergency fund as one of the
pillars of her overall financial plan. Within
a few months of shifting some of her longterm
savings to an emergency fund, backed
up by a lower-than-car-loan rate HELOC,
my client’s car engine burned up on an
attempted startup. Later that day, because
she had cash in hand, she negotiated a great
deal on a new car.
As I reflected on these events, it
occurred to me that the similarities
between aviating and financial planning
are overwhelming. Both require very
extensive training, qualifications, and
a well-communicated plan before
takeoff. They also require ongoing
skills maintenance, leadership training,
regulatory compliance, regular
communications, a credentialing process,
navigation skills, risk management
procedures and practices, alternate plans
if your passenger/clients land other than
as planned—and above all, keeping a cool
head when that proverbial stuff and a fan
inevitably meet.
Here are a few principles that I’ve
learned as a pilot that also guide me as a
financial advisor.
Communication is the key. Before
people fly with me, I clearly communicate
that I am their captain and that they must
follow all my directives once they touch
the airplane. I explain risks and emergency
procedures, simple dos and don’ts, and the
goal of having a safe flight. Before starting
the engine, I take every step I can to
increase the probability that everyone will
reach our destination safely.
Like financial plans, this is never a
100-percent proposition. Weather surprises,
medical emergencies, system failures, and
9/11-like events can force alternate plans.
As pilot, I need to know the appropriate
procedures to face those dangers.
Similarly, flying has helped me
understand that clients are my passengers.
With my advice and guidance, they select
their destinations and timelines. It is my
duty to get them there safely. It is also my
duty to determine who can be a passenger.
One bad passenger can jeopardize
everyone.
Not all apples are equal. When
I was a much younger planner, I met a
prospective client with great wealth and
complex finances. I let this client onboard.
At the first meeting, he was very polite;
but from the second meeting onward,
he challenged my competence and my
34
Napfa Advisor October 2012

Eye On... Financial Planning
leadership. Naïve and desiring to please,
I attempted to accommodate his demands
to serially rewrite his financial plan
proposals. The more I did, the more he
demanded—all without paying for it. In our
conversations, it became clear to me that
he neither understood the value of financial
planning nor my competence and my
training to assist him in reaching his goals.
I recognized that I had failed to adequately
communicate how he and his family could
have a safe journey, as well as where our
professional boundaries were.
I also found that the time my staff and I
devoted this client threatened the safe arrival
of all my other clients. The last straw came
when he demanded that I do something
illegal. He had finally consumed my
patience. I recalled something I learned in
aviation: If a passenger becomes disruptive,
land ASAP and jettison him or her. For the
sake of the whole, I cut him loose.
Left unmanaged, one bad apple can
bring down the whole ship. If you discover
a “bad-acting passenger,” follow my
aviator rule and get back on track with
the rest. This lesson alone has saved me a
planeload of headaches and money, and has
allowed me to focus on the best parts of my
practice.
Keep cool. There is nothing that has
tested keeping my cool more than market
meltdowns that have plagued the first
decade of the 21st century. During each
crash, clients and nearly every layperson
I knew were uttering that nasty four-letter
word: “sell.”
These occasions are true tests of
advisor mettle. When fear-fueled crowds
shout, “Don’t you see what’s happening?
Sell while we still have something!” This
is when I snap on my captain’s hat and
explain the environment, plan of action,
and consequences of crowd behavior.
Most of all, I explain how we planned for
such an event and why, except for small
adjustments, it is prudent and wise to stick
with the plan.
Not every story has a fairy tale ending,
but, predictably, markets recovered—even
home prices—and those who weathered
heavy turbulence with me fared much better
than those who bailed. Advisors are captains
who need to do all they can to keep people
from hurting themselves and others by
presenting calm, direct communications. We
remind people that no matter how rocky it
is, we have been through similar situations
many times before. Each of us must hold on
to our seats and maintain our cool. Tactically,
we can try for a smoother ride, but no matter
what, we have to understand that turbulence
is normal, and severe turbulence doesn’t last
long.
Embrace alternative arrivals. A few
years ago, while my wife Peggy and I were
overflying the Chesapeake Bay returning
from a family reunion in North Carolina
to Boston, my radio picked up a worsethan-forecasted
weather briefing. New
England would soon be shrouded with low
cloud ceilings and poor visibility. I could
only fly by visual-flight rules, because my
instrument (or flying-in-the clouds) rating
had lapsed. Assessing the risks, I decided
to land at Cape May, NJ, and wait out the
weather.
The layover turned out to be some of
the most pleasant 24 hours we ever had
in our travels. Fascinated by flying, our
inn hosts treated us like celebrities. They
pointed out fun things to do and gave us a
wonderful short history of the region. The
seafood was heavenly, the shore breeze
cooling, and my wife and I had landed
some precious footprints-in-the-sand time
together.
Conclusion
Flying has made me a better financial
planner because it has steeled me to do
the right things at the right times, even
if they’re unpopular and difficult. I am
always aware that the buck stops here—
whether it involves safety, leadership,
business, regulations, training, credentials,
or procedures. Passenger or client: In every
case, there’s a plan to land them safely,
regardless of atmospheric conditions.
Finally, unplanned alternate arrivals can be
lots of fun, too. Just ask Peggy.
Steven Wightman, CCPS, CFP ® is owner
of Wightman Financial Network, LLC,
based in Lexington, MA. He has flown more
than 200 miles per hour on an airplane
that he built, approaching a national speed
record for a single-engine, amphibious
plane. He can be contacted at steve@
wightmanfinancial.com.
Napfa Advisor SEPTEMBER 2012 35

Kevin Adler, kadler2@earthlink.net
In the Limelight
Owen Murray told the Wall Street
Journal on Aug. 24 that he uses
Marketfield Asset Management’s
Marketfield Fund, a long-short equity
mutual fund, to complement broad market
funds.
In a response to an inquiry on the
CNNMoney “Help Desk” feature, Brian
Pon wrote that a retiree might have to
deviate from the commonly held belief that
a 4-percent annual withdrawal rate is always
sustainable. After a period of poor returns, a
retiree should consider reducing withdrawals
to protect a nest egg, wrote Pon.
A column by Jason Gittins was published
in the North Bay (California) Business
Journal on Sept. 17. Gittins wrote about
how to select a financial advisor, focusing
on method of compensation, fiduciary
obligation, services provided, and advice
provided for clients during the 2008-’09
economic downturn.
The Small Business Administration is
crediting Mary Baldwin for helping
an entrepreneur in Melbourne, FL, turn
around her business after experiencing a
credit crunch in 2009. Baldwin is a board
member of the Women’s Business Center
at Florida Tech, which helped Melbourne
Dancewear find a cheaper retail location
and create a new loyalty discount program,
among numerous innovations.
InvestmentNews spoke with Lauren
Locker during the week she assumed the
chairmanship of NAPFA. Locker said
that she envisions a collaborative process
on key issues, such as the fight over a
self-regulatory organization for financial
advisors.
NAPFA corporate member Modera
Wealth Management LLC has been
named as one of Inc. magazine’s
500/5000 list of America’s fastest
growing companies. Modera employs 31
staff members, including 17 with CFP ®
certification and three Chartered Financial
Analysts.
After NAPFA’s West Conference, Brent
Hunsberger of the Oregonian newspaper
summarized key points about the financial
challenge of living in retirement for
several decades. He quoted Rick Miller
about the importance of Social Security
and Cheryl Krueger on how to estimate a
client’s expected lifespan.
In August, Cathy Curtis merged her firm,
Curtis Financial Planning, with ClearRock
Capital. ClearRock has offices in Sun
Valley and Boise, ID and Palo Alto, CA.
Curtis’s former office in Oakland will
become a new ClearRock office.
Bernie Kiely looked at the 2011 federal
tax return for Mitt Romney and told
AdvisorOne.com that Romney could
have reduced his taxes with some basic
strategies. For example, Romney could
have utilized municipal bonds to produce
tax-exempt interest rather than accruing
more than $3 million of taxable interest
last year.
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.
BusinessInsider.com published 15
recommendations from Timothy Hayes
about the college financial aid process.
Among his tips: home equity is not part
of the financial aid calculation, so there is
no advantage to drawing down equity; and
loans are not considered part of a student’s
income, though gifts are.
On Oct. 3, three NAPFA members talked
with the Wall Street Journal about
making the transition from accountant to
financial advisor. Henry Bragg said that
accountants work at a faster pace because
of tax deadlines, but advisors must spend
more time on communications because
they work with clients on a wider range
of issues. Ann Gugle agreed that having
people skills are the critical factor. Ken
Weingarten said that his wife Trina, who
is a CPA, decided against adding a CFP ®
certification.
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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 broker-dealer,
October
is
2012
distributor for the Select Sector SPDR Trust. SEL000813 exp. 03/31/12