Financial Planners

Reported cases of fraud and abuse by financial planners have jumped 155 percent in the last two years, costing investors $400 million, a study released yesterday by the North American Securities Administrators Association Inc. showed. The survey, which covered 30 states and 79 incidents, found that more than 22,000 investors lost money through apparent fraud or abuse between mid-1986 and mid-1988. That compares with 31 cases of fraud and abuse and $91 million in losses reported in a comparable two-year study done in 1985.

ChFC, CFP, RIA, CLU, EA, PFS. Investors face an alphabet soup of certifications and credentials as they shop for financial advice. Many need help as the bear market rips their account balances. But the proliferation of acronyms adds to the problem of finding the right advice. Experts say the Certified Financial Planner or CFP designation is the gold standard for generalist financial advisers because testing for it is rigorous and the CFP board has proactive disciplinary procedures.

Campbell Soup has laid off 1,400 employees in Camden over the last several months. AT&T has been cutting tens of thousands of workers nationwide and is closing a plant in King of Prussia. General Electric, Unisys, SmithKline, Fidelity Bank, Penn Ship - the list of companies merging, divesting, reorganizing, downsizing, restructuring and streamlining goes on. No matter what they call it, the result is likely to be the same: Employees from the mailroom to the board room, from the factory floor to the sales floor, suddenly are out of work.

There is a pernicious myth about retirement that goes like this: You have to set up your savings and investments so that they throw off enough income to pay yearly expenses. For many people, this means yanking most or all of their wealth out of stocks, and investing in certificates of deposit, money-market accounts, and bonds. The idea is that retirees should put up with the lower returns on those vehicles in exchange for the security of guaranteeing an income every year. But often, financial planners say, the so-called income portfolio falls short, leaving retirees without enough money to pay the bills.

There is a trade-off between risk and profit. Biggest profits can mean gravest risks. For decades, this has been a popular adage for investors. But just how well do people understand the relationship between risk and return? Not well at all, say two Philadelphia-area professors, Michael J. Roszkowski, a research psychologist at the American College in Bryn Mawr, and Glenn E. Snelbecker, a psychology professor at Temple University. Early in 1989, the men will complete a year-long study on financial risks and how investors associate risk with return.

Few professions have grown as fast as financial planning. From several thousand practitioners nationwide in the late 1970s, the number of individuals calling themselves financial planners, or some derivative, has exploded to 200,000 to 300,000 today. They are everywhere: Insurance companies have sprouted financial-planning departments, stock-brokerage firms tout the virtues of their financial consultants. Most major banks have hired financial planners. And thousands of lawyers and accountants have added personal finance to their lists of skills.

We all dream about it - but what if it actually happened? What if, like those winners of the $656 million Mega Millions lottery, we actually had to wonder now what to do with the money? What financial planners and people of means advise is that lottery tickets are just that - a lucky win. But there are real issues associated with planning for a sudden windfall. The Mega Millions winners will now be targets of both legitimate and illegitimate financial advisers, says securities attorney Andrew Stoltmann, who has represented lottery winners who have been defrauded out of the entire amount.

On a recent Thursday night, the popular television series L.A. Law focused on the doings of today's version of a snake-oil salesman - a financial adviser. The adviser is an oily character, indeed. While his brochures preach "diversification," "conservative estate planning" and "a varied portfolio to minimize risks," the evil counselor knowingly sinks every last cent of a 74-year-old widow into a gold mine without gold. When told his action has reduced the widow to welfare, he snarls, "I don't care if she has to hock her dentures.

Want to give the bride and groom a gift that will be remembered long after the thank-you notes are sent? Think stocks, not silverware. Bonds, not blenders. Calculators, not china. Investments and money-management tools are great gifts for newlyweds, says New York investment consultant and author Nancy Dunnan. "I think it's a wonderful way to introduce young people into the world of finance and into taking care of their own finances," she said in a phone interview. Ditto for college grads, Dunnan says.

Been giving investment advice without a license again, eh? Well, you have through Nov. 30 to take advantage of the Pennsylvania Securities Commission's amnesty offer. As part of an effort to protect investors, the state is accepting registration applications from people who have been making investment recommendations regarding securities without a license from the state. "The whole purpose is to give unregistered financial planners a break at this point," said Terry Reasner, director of licensing and compliance for the commission.

We all dream about it - but what if it actually happened? What if, like those winners of the $656 million Mega Millions lottery, we actually had to wonder now what to do with the money? What financial planners and people of means advise is that lottery tickets are just that - a lucky win. But there are real issues associated with planning for a sudden windfall. The Mega Millions winners will now be targets of both legitimate and illegitimate financial advisers, says securities attorney Andrew Stoltmann, who has represented lottery winners who have been defrauded out of the entire amount.

Charles F. Case, 100, of Lansdale, a financial-planning consultant, died Friday, Jan. 13, of heart failure at Abington Health Lansdale Hospital. Two days before his death, Mr. Case was working at his computer at Borer, Denton & Associates, an investment-advisory firm in Blue Bell. He was still driving his Cadillac to the office until November. In recent months, colleagues picked him up. "Charles had a good attitude about life. He had a wonderful sense of humor and always got the joke," said Fred Bluefeld, a colleague for 20 years.

Despite the best intentions, retirees make the same money mistakes over and over again. If you don't break the pattern of financial neglect, your money may not hold up. Here's a look at some errors and how to avoid them: Being too conservative with money. Treasury bonds, certificates of deposit, and other savings instruments with scant yields can give retirees a false sense of security. They guarantee some income, however small, and can provide soothing protection from dizzying stock market volatility.

The number of mass layoffs may be much lower than it was three years ago, but when job loss happens to you, it doesn't really matter that fewer people are getting pink slips. The financial hit hurts just the same. For the Delaware County boroughs of Marcus Hook and Trainer, the pending closure of oil refineries by Sunoco Inc. and ConocoPhillips will eliminate the jobs of more than 900 workers in early 2012. That's a big hit for two small towns. While the companies continue to try to find buyers for their sprawling complexes on the Delaware River, a nonprofit group representing financial planners intends to host a free seminar next week on what to do when facing the loss of a job. The Financial Planning Association's Philadelphia Tri-State Area Chapter will tap volunteers from its 720 members for the event, to be at the Ramada Philadelphia Airport Hotel on Route 291, Essington, from 6 to 9 p.m. next Wednesday.

If you retire, how much money can you remove each year from your savings and make sure you don't rob your golden years of the gold you will need to put food on the table? In the last couple of decades, many financial planners had their clients live by what's called the 4 percent solution. Backed by research done in the 1990s, the solution enables a retiree in the first year of retirement to take 4 percent out of his or her total retirement savings and use it for living expenses. Then, each year the person can increase the amount just a tad to cover inflation.

Slowly, people are tiptoeing back into the stock market, enticed by a three-year market high. Standard & Poor's strategist Howard Silverblatt has dubbed these "happy days. " The Standard & Poor's 500, an index that roughly reflects the overall stock market, recently was up about 8 percent this year. If you had put money into the market at the March 2009 lows, you would have gained about 100 percent. But memories of the dark days of 2008 and 2009 remain vivid. And people still have scars.

In 1988, well before the bubble burst on high-flying computer-era stocks, Glenn E. Snelbecker noted that financial planners and their clients can be blind to risk. Especially, he said, when planners don't fully understand their clients' ability to withstand such risks. "The planners who keep their clients at a distance are looking for trouble and probably don't even know it," Dr. Snelbecker said in an Inquirer interview. "I don't think the planners are malicious or negligent.

With the economy, and retirement funds, in shambles, a lot of us wonder when, or if, we will ever be able to retire. These sites provide the first steps for finding out. First, take a deep breath. Can you recover? This site charts the prospects of regaining retirement investment losses. For those under 40, there's hope. For those over 40, things will be difficult. And for those over 50, "Regaining the losses of 2008 might not be possible before retirement age, no matter what strategy is used.

A Gloucester County financial planner pleaded guilty yesterday to swindling more than $400,000 from the life savings of 15 small investors, authorities said. Gary Tunnicliffe, 46, of Woodbury, acknowledged to U.S. District Judge Robert B. Kugler that between May 2000 and April 2003 he misappropriated the investments of his clients by making fraudulent promises, said U.S. Attorney Christopher Christie. As conditions of his release pending sentencing Nov. 3, Tunnicliffe must surrender his travel documents, receive mental-health counseling, and refrain from entering any facility that offers gambling, Christie said.

ChFC, CFP, RIA, CLU, EA, PFS. Investors face an alphabet soup of certifications and credentials as they shop for financial advice. Many need help as the bear market rips their account balances. But the proliferation of acronyms adds to the problem of finding the right advice. Experts say the Certified Financial Planner or CFP designation is the gold standard for generalist financial advisers because testing for it is rigorous and the CFP board has proactive disciplinary procedures.