Newsletter for March, 2012
Letter from the Editor-In-Chief
Having tomorrow's newspaper today has great value. But what if there are 'tells' that point to tomorrow's trends? Judging from the growth of the ADFP and the vitality of its membership, my opinion is that the evolution of divorce as a strictly legal construct to one with profound financial community interconnectedness is a glimpse into the future.
What do the clients think about this? Though the professionals involved in the divorce process have a say in the matter, it is the public that truly rules the roost. The market determines who the winners and the losers are. They telegraph to us their needs every day by choosing their method of choice- the traditional litigated approach, collaborative, or mediation. It's up to us at that point to deliver the expertise and compassion they're looking for throughout the process. Noted economist Joseph Schumpeter had it right in 1942- the forces of creative destruction will remove a given methodology in favor one that works better/ priced better/ faster/ easier /etc. Where are you and your business in the divorce process?
The arc of time answers that question much more clearly and provides an interesting perspective. In hindsight it's clear that mainframes would give way to desktop computers. But judging from the growth of the ADFP, it is beyond clear that clients are looking for professionals that can support their goals, needs and objectives when it comes to their divorce and their finances.
Your Association - the ADFP - has made substantial inroads towards changing and supporting the way divorce is handled both domestically and internationally. Proof?
What are they going to say about your business in the next 5-10-20 years? Tell your clients, your family and friends about the ADFP, and let's keep creative destruction an ally. The dinosaurs didn't have much say in the matter, but we do. The vitality of our organization and our drive to achieve our mission is possible only with you as an involved and caring member.
By: Amy Whitlatch
Two recent events have caused me to think more deeply about the difference between Divorce Financial Planning (often referred to as "divorce financial analysis" and Financial Planning. One was a conversation I had in my role as Vice President of Membership of the Association of Divorce Financial Planners with someone interested in being a member of the ADFP. As I listened to what he described as what he wanted to be doing, and I shared what I actually do, we jointly determined what he really wanted to do was post divorce financial planning! I was also recently part of a team facilitating basic interdisciplinary collaborative divorce training in Cincinnati. In my breakout with the financial advisors, I spent time not only on what was different about collaborative divorce financial planning, but how divorce financial planning differs from the financial planning we all had been practicing for some time. The difference was appreciated and noted by my attentive and motivated audience.
There are many specific services a divorce financial planner might provide that a financial planner might not, such as tracing separate property in a home, brokerage or retirement account, estimating the impact of support payments on both parties' cash flow, providing a lifestyle analysis, or testifying in court on these or other financial topics. However, there are important differences on a higher level, and indeed this higher level is where thoughtful people can make a good decision regarding if divorce financial planning is a profession they want to enter. You're not in Kansas anymore, Dorothy!
A financial advisor is accustomed to being in charge - of the flow of work with the client, the nature of that work, and often quarterbacking how the financial details intersect with and coordinate with other professionals the clients need to keep their financial lives in order such as accountants, or estate planners. Our clients look directly to us for guidance.
The end of a marriage is most certainly a financial event, but first and foremost it is a legal event. It takes a court order to end a marriage. We are participating as consultative professionals in someone else's universe - the legal universe! It is often the attorneys who invite us to participate in a case - and while they are certainly open to our thoughts and suggestions, the ultimate decision of how things proceed is theirs. The timing of our work (and that can be pretty short notice sometime!) is often largely driven by the attorneys or the legal process being used. We may be providing an analysis directly for the attorneys and never actually meet the clients, let alone become another trusted source for advice to those clients!
There are many times when one or both parties come to us before they meet with attorneys, or might work with us separately while working with attorneys. It is in the best interest of the client for us to provide guidance and advice that is in concert with the attorney's work - or at least presentable and understandable and respectful of the attorney's role. If our work is perceived as problematic either in terms of local laws or the specific non monetary aspects of the case, it may be dismissed in the actual proceedings, and the clients have not received good value for their money in working with us. Local laws may leave us scratching our financial heads - why does the State of Ohio consider it a deviation to allow that families might actually spend additional earnings over $150,000 on their children? The law is there - it is not our place to interpret it. We add value by the financial tools we can use to help clients and attorneys work through the law (and perhaps appropriately deviate from the law). If we thought a law needed to be changed, we would certainly need to enlist the aid of attorneys to go about taking steps to do so. When I presented a talk on divorce financial planning at the NAPFA annual conference a few years ago, I specifically remember a member of our audience feeling quite uncomfortable about my "It's the attorney's sandbox" pronouncement. At the end, he said to me "I don't want to do what you do". It was good he thought it through!
You Are Planning for Tomorrow, not the next 30 Years.
When we review a net worth statement (we often call them property statements in the divorce financial planning world) or a historical or projected budget, there are a host of ideas that flow through our minds about what this client needs to do to secure his/her financial future. Often, we are also wincing at past choices! But hold on! This is not the time to be providing portfolio structuring advice, or bringing up whether or not somebody is participating in his/her 401(k). These are people who need your financial input on how to navigate through an immediate division of assets and the division of cash flow. By the time there are two households, there may not be any money in the short term to defer to a qualified retirement plan or add to disability insurance. Divorce financial planning certification training often places great emphasis on longer term projections. Five years can be extremely useful! Going 10 -30 years down the road is sometimes helpful (usually when the clients are near retirement). Quite frankly, there are times when projecting out that far is pouring salt in an open wound - both parties will be lucky if their financial heads remain above water. Sometimes it is clear both will be okay - and maybe the "relative" okayness of the parties is an appropriate topic. Often, so many things may change, particularly for younger divorcing people, that longer term projections are overly speculative. Many times clients make less desirable financial decisions because it gives them a non-financial benefit that is more important and we need to respect that. Our jobs are to help attorneys and clients understand as best as possible the financial consequences of the options available in the realm of reason, and/or the law (depending on the path chosen to end that marriage), and the clients' goals and interests. Often, our specific tasks are limited to the assistance being requested by the attorney(s) - and we need to respect that and be happy to have a seat at the table. At the end of a divorce or dissolution, we ideally want people to understand what they have signed, what is being transferred, what is coming into a new account or leaving an account, what they will pay or receive, how it will be taxed, how they live with that amount. Financial planning can start after the divorce decree is finalized. You may be the person who will also help with that financial planning, but starting it too soon may only result in increased anxiety and confusion on the part of your client and perhaps dissatisfaction with your work.
There is a need for both divorce financial planning and financial planning in the lives of people ending their marriages - the goal should be the right advice at the right time.
by Cindy Thompson
The Greater New York Chapter of the ADFP's most recent meeting was held this past month, Feb 8th. The active group meets the second Wednesday of every other month from 8 to 9:30 am at Benjamin's Steak House.
John M. Johansen, CPA, CFP™, and MBA addressed an enthusiastic group of planners and allied professionals including matrimonial attorneys, mediators and divorce coaches.
Currently, John is a self-employed CPA and CFP who provides Tax, Financial Planning, Forensic Accounting and Business Valuation services. He also is an adjunct professor of accounting in the Fordham University Gabelli School of Business. In prior years he's worked at Lazar Lipton Valuation in NYC.
John presented many of the potential and proposed changes in taxes that are slated to go into after FY 2012. Stressing how important it is to proactively "plan for the worst" while always "hoping for best" for our divorcing clients, John highlighted the need to model higher tax rates when doing projections starting in the near future and beyond, such as potential increases in individual tax rates, as well as the expiration of the "Bush tax cuts". We need to help our clients plan by taking into account both higher marginal rates and wider rate tax brackets - that will place higher taxes on much lower earning families in the near future. For example, the 39% top bracket is scheduled to reappear after a decade.
The AMT - Alternative Minimum Tax is also poised to potentially affect a much larger swath of the American's earning starting at much lower combined incomes of $75,000.
John also detailed the proposed changes in treatment of dividend income. Clients who have a large portion of their income derived from dividends will likely be facing higher rates and changes in the "preferred" designation that longer term holdings generating dividends currently enjoys.
As a follow-up to last month's announcement, this year's annual conference will be held September 20-22 at the Doral Arrowwood in Rye Brook, New York. This is the same site as last year's conference, which was extremely well received. We are just beginning to plan content for the conference and welcome any suggestions you might have for topics or speakers. Suggestions or nominations for this year's Pioneering Award are also welcome. Remember, as with the ADFP as a whole, this is YOUR conference, and YOU can play a role in once again making it a great event for the divorce financial planning community. We welcome your participation and the opportunity to learn state-of-the-art information and processes and renew relationships with colleagues from across the United States, Canada and elsewhere.
ADFP Important Notices
1. Direct Reporting of CEUs to IDFA. We are delighted to inform you that IDFA will begin processing en masse CEUs for our mutual members who attend our annual conference. We will be reporting them to IDFA by name of attendee and number of credits, and they will process them directly instead of requiring each attendee to enter the information online themselves.
2. I invite ADFP members who are also FPA members to contribute to their divorce community blog and to contribute articles to their blog site. ADFP/FPA members are invited also to consider becoming a mentor to FPA members interested in learning or building a divorce financial planning practice.
3. Lili Vasileff, President of the ADFP, is Member of the Advisory Board of Start Over Smart Expo and has secured for free of charge, the ADFP as an exhibitor with our booth at the Expo event. Start Over Smart Divorce Expo is offering exhibitor opportunities to ADFP practitioners based on exclusive geographic territories and you can find out more at www.startoversmartny.com. Tickets are on sale and is a great event for clients to attend as well.
4. Dates have been set for ADFP's 10th Annual Conference, September 20th - 22nd, 2012. Last year our dedicated volunteers created an exciting, informative program that was enjoyed by all. You too can make a difference! We cordially invite you to serve on the 2012 Annual Conference Committee for what's to be another great conference! E-mail your volunteer request to ADFP@DivorceAndFinance.org. We look forward to working with you.
5. The National Association of Personal Financial Advisors (NAPFA) and the Association of Divorce Financial Planners (ADFP) are establishing a relationship to share educational content with the members of the respective organizations to help them enhance their knowledge base. Join the Ranks of the Best Fee-Only Financial Planners in the Country! As a special offer for ADFP members, you can join NAPFA at $100 off your first year member dues.That makes your first year dues only $475*. Please note that this special offer is only available for those becoming members of NAPFA for the first time. (*a one-time non-refundable processing fee of $150 still applies). To get started, simply contact Anthony Aloy, NAPFA's Membership Coordinator, at 847-483-5400 ext. 126 or firstname.lastname@example.org. Mention that you are an ADFP member!
New York City is getting its very first Divorce Expo! Start Over Smart: A Modern Divorce Expo-the must attend event of 2012-is being held on March 31-April1 at the Metropolitan Pavilion in NYC. The Expo brings trusted experts like Today Show Financial Advisor Jean Chatzky, New York Times Best Selling Author and Life Coach Cheryl Richardson, and a full roster of guest speakers and exhibitors all under one roof with the sole purpose of helping people START OVER SMART. Experts will be on hand to provide attendees with guidance on their legal, financial, parenting, and wellness needs. Plus, attendees can gain tips on how to reinvent their lives post-divorce with the Expo's fashion, beauty, and dating experts, including Celebrity Hairstylist and Trendsetter Sally Hershberger and Macy's By Appointment. Tickets to Start Over Smart: A Modern Divorce Expo-and its exclusive Opening Night Cocktail Mixer-are available now at startoversmartny.com.
ADFP Greater Boston Chapter Meeting
The next ADFP Greater Boston Chapter Meeting will be held on Thursday April 5, 2012 from 7:15AM to 9AM in Waltham, MA. Our guest speaker will be Katie Greeley who will speak to us about how the changes in mortgage lending are affecting divorcing individuals. Please register at http://adfp-boston.eventbrite.ca/
2012 Long Island Chapter Meetings
The dates for 2011 Long Island Chapter of ADFP meetings are as follows:
Meetings are located at: Suffolk County Bar Assoc, Hauppauge, NY
Thanks to Jane at Suffolk County Bar Assoc for all help! For more information contact:
Maria T. Carrara CPA, CDFA, PFS
Membership Renewals - A Friendly Reminder
Please send in your membership renewals if you have not already done so. Continue to support your profession and all the good work ADFP is doing. Take advantage as well of all of the personal benefits associated with ADFP membership. Thanks for your continued support. Click here to renew online.
New York Association of Collaborative Professionals
|Organization||Week 1||Week 2||Week 3||Week 4|
|Association of Divorce Financial Planners (ADFP)||March 15 Long Island Chapter Meeting||April 11 Greater New York Chapter Meeting|
|National Association of Personal Financial Advisors (NAPFA)|
|Financial Industry Regulatory Authority(FINRA)||March 6
District Compliance Meeting
March 8 Fixed Income Conference New York, NY
|March 28 District Compliance Meeting Kansas City, MO||April 4 District Compliance Meeting Boca Raton, FL||April 19 District Compliance Meeting Long Island, NY|
|Society of Financial Service Professionals||March 14 Tactical Asset Management: The Proper Way to Implement MPT Webinar||April 11 Life Insurance in Traditional and 412(e)(3) Fully-Insured Defined Benefit Plans Webinar||April 19-20 Central Illinois Mini Institute|
|American Bar Association (ABA||
Lifetime Income Options for Retirement Plans
March 7 Women in Financial Services Networking Event
|March 20 You're Going to Mediation or Arbitration: Now What? Webinar||April 14 Spousal and Domestic Partner Issues in Pensions and Retirement Income Webinar||April 18-21 Section of Family Law 2012 Spring CLE Conference Miami Beach, FL|
|National Association of Estate Planners & Councils (NAEPC)||
Divorce Issues In Estate Planning
March 15 Transferring the Family Vacation Home Portland, ME
|March 20 Strategic Positioning of the Family Business and Wealth Bradenton, FL||April 3 The Year in Review: An Estate Planner's Perspective of Recent Tax Developments Richmond, VA|
Any questions? Comments? Please feel free to contact our Editor-In-Chief Andrew Samalin, CFP® Andrew.Samalin@SICounsel.com.