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Invest like Mitt Romney? Use a Self-directed IRA, Even if You’re Not a One Percenter

How can you invest like multimillionaire Mitt Romney? Through something called a self-directed IRA. The former presidential candidate held from $20 million to $100 million in one.

Self-directed individual retirement accounts let you invest in real estate, precious metals, even Eagles tickets.

What is a self-directed IRA? Simply, you decide what, beyond Wall Street’s offerings, to invest in your retirement account.

It’s a niche vehicle, with complex rules (see IRS Publication 590). Most banks and brokerages won’t offer self-directed IRAs because the Street makes little money from them.

You can buy and sell almost anything: private placements, oil and gas leases, tax liens, and deeds – everything except life insurance and collectibles such as jewelry, rugs, and antiques.
Outfits such as Blue Bell-based Camaplan, founded by Carl Fischer and Maggie Polisano, administer self-directed IRAs.

Camaplan places the accounts in custody with Bryn Mawr Trust. Its 3,500 clients own notes, real estate (single-family homes, condos, industrial warehouses, office, retail), private placements (trusts and hedge funds), and precious metals (gold, silver, platinum, palladium).

Local real estate developer Sheila Dragon uses IRA lender money to fund her projects. “It’s a great way to diversify. I offer my investors 10 to 15 percent returns annually,” she says. “But you have to be careful, because you’re handling someone’s retirement money.”

Some IRAs own the bizarre or the interesting, Fischer says: llamas, which they shear to sell wool; houses that Marcellus Shale oil frackers rent.

There are drawbacks. Tax-advantaged accounts have contribution limits, as do all IRAs, 401(k)s, and educational savings accounts, Fischer says. “Self-direction just allows you more choices” beyond stocks and bonds, he adds.

It’s key to avoid self-dealing, which prohibits using tax-advantaged assets for personal use. For example, if you buy a Jersey Shore vacation property inside an IRA, you can’t rent it out to family.

Fraudsters may exploit self-directed IRAs, because they permit investors to hold unregistered securities and the accounts’ custodians or trustees likely have not investigated the securities or the background of the promoters.

In 2011, the Securities and Exchange Commission’s Office of Investor Education and Advocacy and the North American Securities Administrators Association issued an Investor Alert to warn about self-directed IRAs. Visit the SEC website (investor.gov) for details.



Read more at http://www.philly.com/philly/business/20150504_Monday_Money_Tip__The_wide_world_of_self-directed_IRAs.html#6Wlj52RsJTFPKuMq.99

529 plans to get a boost from Congress

POSTED: Monday, April 27, 2015, 1:08 AM

Popular 529 education savings plans are even more improved, thanks to Congress’ exerting some rare common sense.

Now you can use a 529 account to pay for computers, software, or Internet access expenses for college, and also you may be able to redeposit money into a 529 plan without penalty if your student withdraws from school.

Last week, U.S. Rep. Patrick McHenry (R., N.C.) introduced legislation to allow 529 plans to pay for certain K-12 expenses, including tutoring, special-needs services, and books.

The bill, H.R. 1928, the Empowering Parents to Invest in Choice Act, also raises annual contributions to Coverdell ESAs (education savings accounts) from $2,000 to $15,000. Stay tuned for updates on the proposed legislation.

Anyone (parents, grandparents, relatives, friends) can contribute to a child’s account with after-tax dollars. Earnings are tax-deferred while in the account, and withdrawals are tax exempt when used for “qualified education expenses.”

Because 529 plans can grow into a large pot of money, they quickly become the subject of infighting in a family crisis.

Let’s say you and your spouse divorce. Your kid’s 529 college savings plan is considered a marital asset and should be included as part of the divorce settlement, says Stephanie Henrick with the High Swartz law firm in Norristown.

Many couples forget to include the 529 money in the divorce agreement.

“People incorrectly assume that a 529 plan belongs to the child,” Henrick says. “Even though the child is the beneficiary, the money does not belong to the child. It belongs to the account owner, usually a parent. The account owner has complete control of the assets and has the power to withdraw all funds, change the beneficiary, change the successor owner, name a new account owner. If you’ve made no provisions, it’s silent in the divorce agreement.”

Henrick watched a good friend lose her children’s 529 plan assets to an estranged ex-husband, who drained the account once he remarried.

“The kids didn’t find out until they were 18 that they had no money for college,” Henrick recalls.

As the price tag for education rises, 529 plans become more valuable. The Treasury Department projects annual tuition costs for college education will increase approximately 34 percent over the next 20 years: private four-year college tuition (housing, books, meal plans not included) will cost roughly $88,000 a year, and an Ivy League school will cost approximately $126,000 a year.

The Pennsylvania Institute of Certified Public Accountants will hold a financial-planning conference specializing in divorce in October in King of Prussia. For more information, visit the group’s website, http://www.picpa.org.


Read more at http://www.philly.com/philly/business/20150427_Monday_Money_Tip__529_plans_get_boost_from_Congress.html#xIHahbpebYxKKxx0.99

RIA (and a fiduciary) must pay $17M in damages to investor clients

Money manager must pay $48 million for bad investments

POSTED: Monday, April 20, 2015, 1:08 AM

A local money manager must pay $48 million in damages to an Ambler, Penn., couple who said he placed their money in unsuitable, illiquid investments such as a Polish tobacco company and turbine-engine makers in Tunisia.

James and Jane Sutow last week were awarded $17.4 million in actual damages, slightly more than $30 million in treble damages and almost $1 million in legal fees and costs by the American Arbitration Association.

The Sutows were clients of Family Endowment Partners and its money manager, Lee Dana Weiss, from 2010 to 2013. They sought damages under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.

“Jim [Sutow] grew up in this area and sold his steel business in 2005,” said the couple’s attorney, Glenn Gitomer.

Red flags popped up a year or so after the Sutows invested. “Weiss had blind faith in his investments. He lent millions of dollars to Biosyntec [Polska, a start-up tobacco-filter firm], a company with no assets,” Gitomer said.

Calls and an e-mail to Weiss were not returned. He can still appeal the arbitration award. The SEC database (www.adviserinfo.sec.gov) shows Family Endowment Partners oversees about $335 million from its Wayne and Boston offices.

According to the award filed in U.S. District Court in Philadelphia, Weiss also invested client money in companies in which he had a personal financial investment, a conflict of interest.

Weiss stopped calling the Sutows to answer their questions and became elusive, Gitomer said. The Sutows consulted a competing money manager about Weiss’ underlying investments, which he had not explained in writing, the arbitration award said.

Then the compliance officers at Weiss’ firm quit. (In a twist, the latest to leave, L. Allison Charley, now works at the Securities and Exchange Commission.)

The Sutows declined to comment except through their attorney.

Unlike Bernard Madoff, Family Endowment Partners and Weiss did not run a Ponzi scheme, but rather invested some of the Sutows’ assets in Biosysntec Polska, which, as the arbitrator found, was akin to a Ponzi scheme in that it used investors’ money to pay past-due amounts owed.

Gitomer said Weiss was a registered investment adviser, and thus a fiduciary, “and a fiduciary has a duty to do right by their clients.”

Fiduciary obligations are a hot topic. Last week, the U.S. Department of Labor proposed a rule requiring brokers and other financial advisers to put clients’ interests first.

“We see what happens when those in and near retirement lose vast sums of money as a result of conflicted advice,” said Joseph C. Peiffer, president of the Public Investors Arbitration Bar Association.

The fiduciary standard may not protect everyone from bad investments. But it offers investors the potential for redress when a fiduciary fails to act in their best interests.



Read more at http://www.philly.com/philly/business/20150420_Monday_Money_Tip__Money_manager_must_pay__48_million_for_bad_investments.html#XHzfxy6UP7H5DuFV.99

“Debt Collective” activists urge students to go on “debt strikes,” stop paying lenders

Did you borrow for college and end up the victim of a sky-high-interest student loan?

A new group, Debt Collective, says it’s time to go on a “debt strike.”

That is, stop paying.

An outgrowth of Occupy Wall Street, Debt Collective is a year-old activist organization rallying financially strapped students of the now-defunct Corinthian Colleges.

The strikers are mostly young adults, including some single parents, who borrowed from Corinthian’s lending arm at up to 14 percent annually.

They still owe on their loans, despite the fact that Corinthian, a for-profit college, was investigated and ultimately shut down by federal regulators.

Its students got no help with outstanding loans. The only agency with the authority to grant relief is the U.S. Department of Education. (Student debt cannot be discharged by declaring bankruptcy.)

So Debt Collective has taken up their cause – and that of those who owe $1.3 trillion in education debt. Among 43 million total federal student-loan borrowers, 7.3 million are 90 days delinquent on their loans, and five million are in default.

Corinthian’s collapse exposed this national problem.

The Education Department has “no process to allow students to apply for, or to initiate, debt cancellation for students who have been subject to illegal practices by their schools,” says Ann Larson, one of Debt Collective’s organizers.

Last month, Debt Collective presented the feds with some ideas. Its 100 or so strikers met March 31 in Washington with Undersecretary of Education Ted Mitchell and the Consumer Financial Protection Bureau, which brokered the meeting.

“It was tense, very tense,” Larson says. “We’re scheduled to meet with Mitchell again in 30 days to get some answers.”

Among Debt Collective’s proposals:

Consolidate the debt of current and former Corinthian students through a single servicer, preferably the Department of Education’s direct servicing arm. “Students’ relief from predatory loans should not depend on their servicer,” Larson says.

Use the Higher Education Act statute U.S.C. 1082(a)(6) to erase student loans and refund money they have already paid.

Include students and consumer-protection advocates in plans to resolve predatory loans, not just college administrators and lenders. “The department makes decision after decision without student input, even though it affects students most profoundly,” Larson adds.

Debt Collective’s efforts to erase or refund student loans could create a template nationally.

A transparent and accessible process for students to ask for changes in loans would be known as a “defense to repayment” process.

Debt Collective came up with its own proposed form, which you can read on its website (www.debtcollective.org).

Independent judges, rather than school officials who have conflicts or financial incentives because they collect the debts, could adjudicate the process.

If a school comes under investigation for wrongdoing, students could be eligible for Debt Collective’s proposed defense to repayment.

“The influence of trade schools is clearly too strong in the Education Department,” says Laura Hanna, cofounder of Debt Collective. She notes that the Association of Private Sector Colleges and Universities – the trade group for the $30 billion education industry – is a powerful lobby on Capitol Hill. The association donates close to $1 million a year in campaign contributions, according to the Center for Responsive Politics (www.OpenSecrets.org).

The U.S. Consumer Financial Protection Bureau’s Student Loan ombudsman, Rohit Chopra, said in a statement after the meeting: “We continue to urge struggling borrowers to submit complaints with federal agencies to aid regulators in holding accountable those who break the law. The bureau’s litigation against Corinthian remains ongoing.”

You can submit a complaint about your student loan to CFPB at http://www.consumerfinance.gov/complaint or by phone at 855-411-2372.

Refinance instead

You can refinance your student debt. Avoid for-profit debt consolidators if possible, says Jeremy Brenn, vice president at Sensenig Capital in Fairview Village, Montgomery County, a financial-planning firm.

“We warn clients away from them,” Brenn says.

Stick with nonprofit credit counselors approved by the Department of Justice. Find listings at http://www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm.

The National Foundation for Credit Counseling is another large nonprofit organization.

“NFCC acquired a student-loan platform that was developed by some of its members,” says Mark Kantrowitz, senior vice president of Edvisors.com, a college-cost planning site, and author of the book Filing the FAFSA.



Read more at http://www.philly.com/philly/business/20150412_Investing_in_You__Group_urges_student_loan__debt_strike_.html#jMXDzoGhXdfSt7KH.99

Vanguard’s recommended list of funds for investors via “hybrid” robo-advisor

Monday Money Tip: Investment help online and on the cheap


POSTED: Monday, April 6, 2015
Robo-advisers. They’re coming from the future, for your assets.

Actually, the term is just slang for low-cost, Internet-only money managers. Start-ups such as WiseBanyan.com and Betterment.com automate investing with few or no humans involved and offer extras such as tax-loss harvesting.

Betterment’s pitch: Investors pay a fraction of what it would cost at a traditional broker or money manager. Some, like WiseBanyan, offer money management for free. But how?

These young robo-advisers generally invest using ETFs, or exchange traded funds, rather than mutual funds.

At local investment giant Vanguard, the new robo-adviser is a hybrid. Clients of Vanguard Personal Advisor Services “have an online client experience but also an ongoing virtual relationship with an adviser,” says spokeswoman Katie Henderson.
That is, Vanguard Personal Advisor Services recommends mutual funds in which to invest and combines automatic investing with some human help from a financial planner.

Currently a pilot program, Personal Advisor Services will be broadly available by the end of the second quarter, according to Henderson. Account minimums are $100,000 but could drop to $50,000 eventually.

If WiseBanyan.com is free, how does a start-up ever make money? Cofounder Vicki Zhou says $30 million in assets and 6,000 clients are not charged fees for management, but the firm aims to up-sell insurance, mortgages, and other services down the road. Average account size is $5,000. WiseBanyan custodies its client assets with traditional broker FOLIOfn Investments in McLean, Va.

Charles Schwab advertised its robo-adviser service as free, which drew howls of protest from competitors. They noted that Schwab directs up to 30 percent of every robo-adviser account into cash, deposited at Schwab Bank. The bank then earns interest on the account.

“They sweep the cash into their bank, and then brand the robo-adviser as free,” Zhou says. “That creates mistrust of the industry, which is bad for everyone.”

Vanguard’s pilot robo-adviser is not free, although it does use low-cost index funds. Fees total 0.30 percent of the amount in an account annually, 0.44 percent including the cost of the underlying index funds.

Personal Advisor Services had $10 billion in assets by year-end 2014, up from $4.2 billion in the third quarter. Vanguard ramped up quickly by moving a portion of existing Asset Management Services clients over to the Personal Advisor pilot. Against the more than $3 trillion the firm now manages, its robo-adviser is a drop in the bucket.

Vanguard’s recommended index funds are all Admiral-share-class mutual funds – not ETFs, although Henderson estimates the costs are the same.

“We have a large amount of flexibility in terms of recommendations based on the client’s individual needs or preferences, but these are the top recommended mutual funds based on our investment methodology,” she adds.

Monday Money Tip: Personal Advisor Advice

Vanguard recommends these funds to customers of the new Personal Advisor Services. (You can invest in other Vanguard mutual funds, too; no exchange traded funds yet, however). All mutual funds are “Admiral” share class.

Portfolio Recommendation Fees

(both taxable and tax-exempt bonds)

Total Stock Market Index (VTSAX) 0.05%

Total Int’l Stock Market Index (VTIAX) 0.14%

Total Bond Market Index (VBTLX) 0.08%

Total Int’l Bond Market Index (VTABX) 0.19%

Limited-Term Tax Exempt* (VMLUX) 0.12%

Intermediate-Term Tax Exempt* (VWIUX) 0.12%

Long-Term Tax Exempt* (VWLUX) 0.12%

*Purchased in taxable accounts only

Read more at http://www.philly.com/philly/business/20150406_Monday_Money_Tip__Investment_help_online_and_on_the_cheap.html#syJTS3I1RaTyeOtH.99

Fiduciary or not? Ask your financial planner…

Beware financial advisers who are not fiduciaries

POSTED: Monday, March 30, 2015, 1:08 AM

Your stockbroker is not a “fiduciary.” What exactly does that mean? Stockbrokers don’t always have your best financial interest at heart.

Don’t get me wrong: I have friends (and family) who work on Wall Street. And many brokers do right by their clients, i.e. not pushing their firms’ own fee-larded products on their investors.

They are good people, but they are not fiduciaries.

Before you sign on with a money manager, ask: Are you a fiduciary? If yes, great. If not, go in with your eyes open.

Fiduciaries, by law, have to do the right thing by their clients. No one on Wall Street wants, by law, to have to do the right thing.
Some street professionals are fiduciaries; registered investment advisers generally are, brokers are not.

And the distinction grows every day.

Anyone whose job is to raise sales cannot meet the fiduciary standard, notes Knut Rostad, president of the Institute for the Fiduciary Standard.

“Brokers may provide useful product recommendations, but they cannot meet the fiduciary standard,” Rostad says.

“They can no more provide objective advice about investments than can the Ford car salesman objectively advise on cars. They may be terrific people but, by virtue of what they do, they will most assuredly provide terrible advice.”

The issue is confusing, and Wall Street wants to keep it that way.

Plaintiffs’ lawyers last week noted that nine U.S. brokerage firms – Merrill Lynch, Fidelity Investments, Ameriprise Financial, Wells Fargo, Morgan Stanley, Allstate Financial, UBS, Berthel Fisher, and Charles Schwab – “advertise in public as though they are trusted fiduciaries acting in the best interest of investors and then deny in nonpublic arbitration cases that they have any such duty to avoid conflicted advice.”

The Public Investors Arbitration Bar Association report is available online at http://www.piaba.org.

“Investors believe they are doing business with individuals they can trust . . .. Yet when that trust is breached, these same firms disclaim liability when held to account in arbitration, and rely on case law to say no such duty exists,” wrote co-author Christine Lazaro, director of the Securities Arbitration Clinic at St. John’s University School of Law.

One example the report cited is Ameriprise Financial.

This firm advertised: “Once you’ve identified your dreams and goals, and you and the advisor have decided to work together, you can count on sound recommendations that address your goals. Our advisors are ethically obligated to act with your best interests at heart.”

However, in a recent arbitration proceeding with a real investor, the firm stated: “Respondent owed no fiduciary duties to claimants and, even if it did, no such duties were breached.”


Read more at http://www.philly.com/philly/business/20150330_Monday_Money_Tip__Beware_financial_advisers_who_are_not_fiduciaries.html#94LeeVG16vc3MAcY.99

Asking for a raise: Morning Joe’s Mika spells it out for women

Investing in You: How should a woman ask for a raise?

Mika Brzezinski is the co-host of MSNBC’s Morning Joe . Beginning April 10, 2015, Mika will kick off a national conference tour in Philadelphia, to empower women to express their worth in business by asking for a raise and/or a bonus. 

Let’s say I’m asking for a raise, pay that reflects the work I do and the value I contribute to my company. The question is . . . how?

I sought out Mika Brzezinski, co-host of MSNBC’s Morning Joe and the best-selling book Knowing Your Value. She’ll be coming to Loews Hotel in Center City on April 10 for the first stop on her “Grow Your Value” tour, a live workshop event with an interactive contest that asks women to enter one-minute videos online showing why they deserve a $10,000 bonus to further their careers.

(For contest rules, visit http://www.msnbc.com/knowyourvalue.)

The “ask”

Brzezinski says she made rookie mistakes when asking for a raise.

“I made it personal, instead of about business,” she recalls.

Women “apologize our way into conversation. We’re too self-deprecating during negotiations. That’s like dumping money out of your purse.

“We worry about being friends with people as opposed to respected business partners first. What should be in your head are data you bring to the table. The rest is clutter.”

Before “the ask,” Lisa Penn, managing director at SEI Private Banking, urges writing down on paper a list of accomplishments and value added. Ask friends and coworkers: What am I good at? What do you come to me for? What information do I give you?

Write down their answers. Take the list to your meeting.

Three big mistakes

Stop apologizing, Brzezinski says. Do not utter the words “I’m sorry” at any point in the conversation. That means at the beginning, the middle, and the end.

Stick to one goal. “You don’t need to address other plans or projects in the conversation. The one focus is your goal. Don’t leave the room without accomplishing that,” she says. “We love our lists. But we sometimes miss the big picture. Men sit around and scratch themselves and talk about baseball for a reason. It’s all a negotiation and a way to relax. So let it happen.”

Practice. Before you have the talk, role play.

“Work with someone to speak in public,” she says. “Make a toast. Get used to being looked at and how it feels weird. Send in a video for my tour competition. Even if you’re not a finalist, that exercise will be so good for you! It should not feel weird. It’s not weird. Do it again and again and make it normal.”

At a Hartford, Conn., book event, women got up on stage and pitched, in a minute or less, why they had value and deserved a bonus.

“Amazing women came out of the woodwork,” Brzezinski says. “The winner was in her 50s, had been fired from Wall Street and opened a secondhand store. The runner-up was a 28-year-old single mom who wanted to go to college. Another finalist was a woman dumped by her husband. She opened a fitness center and needed more equipment. And a grandmother walked to the conference. She had just graduated college in her 60s and wanted to open an animal sanctuary.”

After Hartford, Brzezinski says, she realized she was on to something special. Philadelphia, here she comes.

The stats

In Pennsylvania, the median annual pay for women in 2013 was $38,000 a year, as opposed to $50,000 for men. If progress continues at the current rate since 1960, the report says, women will not receive equal pay until 2072. In New Jersey, ranked fourth in the nation, the median pay for women that year was $48,000 vs. $60,000 for men, according to a new report, “Status of Women in the States: 2015,” by the Institute for Women’s Policy Research.

If the pay gap continues at the current rate, women in the United States will achieve equal pay in 2058.

But in some states, a woman born today likely will not see wage equality in her lifetime. Five states – West Virginia, Utah, Louisiana, North Dakota, and Wyoming – will not see equal pay until the next century.

Overall, the winner for women’s employment and earnings is Washington, D.C., the report says. Last is West Virginia. Pennsylvania ranked 19.

“Women’s status on employment and earnings either worsened or stalled in nearly half of the states in the last decade,” says Heidi Hartmann, the Institute for Women’s Policy Research president and a MacArthur fellow.

Typical working women in the United States lose out on more than $530,000 in a lifetime due to the gender wage gap. Race and ethnicity play roles, as well. Hispanic women have the lowest median annual earnings at $28,000, well below the earnings for all women ($38,000). Among Asian and Pacific Islander women, for example, Asian Indian women earn more than twice as much as Hmong women ($60,879 and $30,000, respectively).

See the data for yourself at the Institute for Women’s Policy Research’s website, http://www.statusofwomendata.org, an interactive tool with each state’s information.

And wish me – or should I say us – luck!



Read more at http://www.philly.com/philly/business/20150322_Investing_in_You__How_should_a_woman_ask_for_a_raise_.html#STMOvP9kHxGrdSSW.99

Free tax help for veterans, plus identity-theft prevention during 2015 tax season

Tax time can be especially stressful for military families. But servicemen and women are allowed extra time to file and are eligible for free filing help.

If you’re serving outside the United States (including Puerto Rico) as of April 15, 2015, you’re granted an automatic two-month extension to file tax returns. If that’s not enough time, by submitting Form 4868 to the IRS, you can extend filing by an additional four months, according to the American Armed Forces Mutual Aid Association.

Relief is also available for those in a combat zone. Such service members are granted an automatic 180-day extension to file, and time to pay – which begins once the service member leaves the combat zone.

Free tax-filing help is also available through the Volunteer Income Tax Assistance (VITA). IRS-trained volunteers assist with military-specific tax questions and issues.

Find a VITA site online at http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers, or call 1-800-906-9887.

Other sources of aid:

Under the Military OneSource Free Tax Service program, service members can file their 2014 federal tax return and up to three state returns online at no cost through H&R Block.

Active-duty military members can receive the classic edition of TaxSlayer for free.

And there’s no penalty on withdrawing money from a 529 plan if your kid attends a U.S. military academy.

The Military Family Tax Relief Act of 2003 provides that a U.S. military academy education will be treated as a scholarship for purposes of the 10 percent penalty on nonqualified withdrawals from a 529 or Coverdell ESA. The value can be withdrawn penalty-free, although the earnings portion will be taxable. If your child has a younger sibling planning to attend college, you can simply change the beneficiary of the account into the sibling’s name.

Identity-theft cautions

Since tax time is prime time for identity-theft crimes, here are some red flags indicating you might be a target:

More than one tax return was filed for you.

You owe additional tax, have a refund offset, or have had collection actions taken against you for a year you did not file a tax return.

IRS records indicate you received wages from an employer unknown to you.

If you are a victim of identity theft, file a report with the local police, and the Federal Trade Commission at either http://www.identitytheft.gov or the FTC Identity Theft Hotline at 1-877-438-4338. Also contact the major credit bureaus to place a fraud alert on your credit.

If your Social Security number is compromised in a tax-related identity theft, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.

Read more at http://www.philly.com/philly/business/20150309_Monday_Money_Tip__Tax_help_for_veterans__and_identity-theft_cautions.html#lmRuHIm1jRBU6kUi.99

Women in transition: When a spouse dies, where’s the family playbook?

Investing in You: Strategies when a spouse dies


Becoming widowed: It could bring some of the most important financial changes in our lives. How do we prepare for – or pick up the pieces after – losing a spouse?

First off, consider a “family playbook” with names of important contacts, account and policy numbers, locations of the wills, and other key documents. (Details in a moment.)

Then decide who’s on your team. A white paper, “Women in Transition,” by strategic consulting firm Spectrem Group found that, in wealth management, widows are most likely to be entirely adviser-dependent – relying on an investment professional or adviser to make most or all investment decisions. But is one adviser enough?

Spectrem found that widows are heavy users of social media (69 percent are on Facebook) and that they invest conservatively to protect their principal, perhaps because 64 percent believe their spouses prepared well for their financial security before death.

If, however, your spouse didn’t prepare, what to do? Consider rejoining the workforce. (More on how below.)

The playbook, the team

“When the husband plays the role of financial caretaker, the wife frequently is completely unprepared to assume those responsibilities. They’re left in a state of great distress because they lacked the tools of the deceased spouse,” says Julia Fisher, wealth adviser with JPMorgan in Center City.

Fisher found a terrific solution through a past client who had witnessed his mother-in-law’s financial terror when her husband died.

“My client came up with what I call the ‘Smith Family Playbook,’ a notebook that had every piece of information a spouse would need: bank accounts, stock accounts, college accounts, IRAs, 401(k)s, life insurance, real estate.”

Each bank account had its own page, including the name on the account, the account number, user name and password, and instructions on when to transfer money between savings and checking.

Each investment fund had its own page, as did each insurance policy, plus financial adviser or contact person. Each piece of property included the title information, repairs, and insurance coverage.

The playbook’s last page instructed: “Form a team, and take control,” including a lawyer, an accountant, a banker, and a trusted adviser.

“Make a budget, downsize, consider financial aid for school education for the kids,” her client wrote to his wife.

Fisher shares this playbook with all her clients.

“He did this to protect his wife, to prepare her for the financial housekeeping. He was a wonderful person who saw how tough it would be for his spouse when he was gone.”

Go slowly

Losing a spouse is such a jarring, heartbreaking experience that many widows and widowers make rushed decisions, financial advisers say.

“Don’t rush into doing anything: Don’t sell the house right away; don’t try to cash in an annuity,” advises Carol Alesi, director of private-client services for First Niagara in Plymouth Meeting.

Take the time to evaluate with your advisers, at least a few weeks or months, Alesi says, “especially since, with annuities, you don’t want to enrich a salesperson with a hasty decision by cashing in an annuity that might charge a huge penalty or surrender charge.”

With a nod to the digital age, Alesi and her husband recorded their user names and passwords for all their online accounts. “We had to sit down and go over everything.”

Rejoining the workforce

When she was just 17, Allison O’Kelly’s father died. Her mother was left an unemployed widow.

“My mom’s life changed dramatically. My father died at 54, my mother was a widow at 53,” O’Kelly says. “She had stopped working and was completely dependent on my dad’s income.”

That prompted O’Kelly to found Mom Corps in 2005, a Fort Washington-based, nationally franchised recruiting firm that helps women reenter the workforce.

After her first child, O’Kelly left a corporate job and started Mom Corps out of her house. She now has 10 employees and 10 franchises with their own staffs. In addition to flexible work, Mom Corps offers small-group coaching.

“Most likely, if you’ve been out of the workforce, you have to go back. Many of my friends are stay-at-home moms, they have a husband who has a very senior job, and she depends on that income for their family. If that stopped? Women put themselves at a disadvantage if they’re not thinking about the what-ifs that happen.”

A year after becoming a widow, O’Kelly’s mother went back to work as a specialist in speech therapy for special-needs children.

“I realized I would never put myself in that situation, because of what happened to her. That year was incredibly stressful for my mom,” O’Kelly says, “especially with two teenage daughters.”

Even as a stay-at-home mother of three children herself, O’Kelly says, she “had to keep my hand in the workforce somehow and never be that vulnerable.”


215-854-2808 @erinarvedlund

Read more at http://www.philly.com/philly/living/20150308_Investing_in_You__Strategies_when_a_spouse_dies.html#xcMDyIf4jAVFiZS5.99

Whistleblowers: prepare for millions in awards, as well as hell to pay

Investing in You: Being a whistleblower has rewards, risks

POSTED: Sunday, February 22, 2015, 3:01 AM

Have you witnessed something illegal, unethical, or potentially fraudulent where you work?

If you rat out corporate bad behavior, you could win millions. Last year, for example, Edward O’Donnell, a former Countrywide Financial executive, won $58 million from parent company Bank of America in a case stemming from the sale of shoddy mortgages.

His award was part of a record $435 million the U.S. government paid in whistleblower awards, mostly related to health-care fraud and cases involving banks and mortgage companies.

But for whistleblowers, there’s also hell to pay. Prepare for years of loneliness and secrecy, an unhappy spouse, and gigantic legal bills.

Whistleblowers generally “sit on pins and needles every day, wondering, ‘Is someone going to fire me and escort me out the door?’ They’re going to work every day, trying to do the right thing. Many times, they come to us after suffering retaliation. Then they’re fired, shuffled off, demoted. Only then do they file a whistleblower complaint,” says Brian Mahany, of Mahany & Ertl in Milwaukee, who put together the Countrywide/Bank of America case and convinced the Justice Department to take it.

You’ll be pleased to discover that Philadelphia – yes, our own City of Brotherly Love – is home to one of the country’s most active jurisdictions for whistleblower lawsuits.

Why? Federal prosecutors here welcome them.

Zane David Memeger, U.S. attorney for the Eastern District of Pennsylvania, “has lawyers with the experience to move forward,” says Mahany.

Still, 75 percent of the lawsuits “go nowhere, and only a fraction win millions of dollars and headlines,” says Marc Raspanti, a Center City lawyer specializing in whistleblowers.

“Meanwhile, you risk your career, devote a huge block of your life, sometimes five or 10 years, to something most people never see or understand,” says Raspanti, a partner with Pietragallo, Gordon, Alfano, Bosick & Raspanti.

His firm represented Michael Epp, who blew the whistle on fraud by Supreme Foodservice, a contractor to the Department of Defense and coalition troops in Afghanistan from 2005 to 2009.

Supreme paid $389 million in fines under the False Claims Act, a Civil War-era statute. As a result of the suit filed in U.S. District Court in Philadelphia, Epp won $16 million – his portion of the fines.

Of 94 U.S. attorneys’ offices nationwide, about a dozen actively investigate and prosecute on behalf of whistleblowers. The Eastern District was “one of the first to do whistleblower work in 1986. There’s now a very sophisticated federal bench here, and they seek these cases,” Raspanti says.

Witness a suit brought by two Philadelphia doctors against Allergan in 2013.

Ophthalmologists Herbert Nevyas and Anita Nevyas-Wallace claim Allergan paid kickbacks to induce doctors to write prescriptions for more expensive eye-care drugs such as Restasis. Their suit, filed under the qui tam whistleblower provisions of the False Claims Act, is pending here in U.S. District Court.

Another suit, filed against Health Management Associates by Ralph Williams, the company’s former chief financial officer, claims that a kickback scheme went on for more than a decade. Health Management Associates operates Lancaster Regional Medical Center and Heart of Lancaster Regional Medical Center.

When you blow

Several government agencies have whistleblower-award programs, including the Internal Revenue Service and the Securities and Exchange Commission. The biggest payouts come from the Department of Justice. Whistleblowers have collected between 15 percent and 25 percent of any recoveries.

Secrecy is the norm. Under the False Claims Act, the details of 16 suits involving Bank of America and its $17 billion settlement were kept secret and sealed until December.

Now we know that whistleblowers in the case – three former employees and a New Jersey mortgage company, Mortgage Now – shared about $170 million, a new record for the largest award against a single defendant.

Mortgage Now received $8.5 million for exposing the fraud of issuing high-risk mortgages. In addition to O’Donnell, Robert Madsen, a former employee with a property appraisal company owned by Bank of America, won $56 million. Shareef Abdou, a former Countrywide manager, received $48 million.

When the feds step in, a case can move quickly.

“We began talking with the DOJ in 2013, about what they were looking for in these types of cases,” lawyer Mahany recalls of the Countrywide case.

“We got a call from the DOJ on a Sunday night, asking, ‘Remember that guy you told us you had at Bank of America? Can you bring him in and get the complaint filed tomorrow?’ And we did.

“By and large, every one I’ve represented, their primary motivation wasn’t money,” Mahany says.

“Sometimes, you get revenge, as well. That’s a powerful motivator.”

Read more at http://www.philly.com/philly/living/20150222_Investing_in_You__Being_a_whistleblower_has_rewards__risks.html#6UsRAbDTlhjA8IcU.99


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