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PrintFinancial planning - a primer
A guide to some of the professionals who can help you take charge of your finances.
OK, you know you need to be saving. You may even be plowing all you can into your company’s 401k. That’s a great start. But where to go from there? How do you know if you are doing all you can?
Many Tulsans may be asking these same questions. Tulsa has risen from 55th to 41st in the nation in per-capita personal income, according to numbers released recently by the Federal Bureau of Economic Analysis.
So, in this city that seems to have some newly found cash, whom should people enlist to help plan their financial future?
From CFPs to CPAs, it’s easy to get lost in the alphabet soup of financial professionals available. Here, TulsaPeople offers a guide to several of the different types of financial professionals who can help you get organized and in charge of your financial future.
Estate planning
The name says it all: Estate planners take a holistic approach and create a plan for a person’s entire estate. Instead of looking for new ways to create wealth, like other financial professionals, estate planners primarily work to organize the affairs of current assets.
This includes many different tools, such as a revocable living trust and irrevocable trust, last will and testament, power of attorney, advanced health care directive, mental health care directive and authorization to disclose medical records.
“Each family is different in structure and goals,” says Susan Muscari, attorney with the Estate Planning Law Center. “And each estate plan takes into consideration the individual family or individual person’s goals for their and their family’s future.”
Estate planning creates the legal documents associated with assets that will be distributed to heirs after a death.
“In money management, it is important not to look at all the ‘what if’s’ of now, but most certainly the ‘what if’s’ (when) the client dies,” Muscari says. “What happens to the family? How is the money managed? Who is provided for? When and how are distributions made? These are all decisions to be discussed with the estate-planning attorney.”
At first glance, estate planning seems most necessary for those with many assets to dispense after death, Muscari says. However, she says every family, despite economic standing, can benefit from creating a comprehensive estate plan, even if just to avoid the cost of probate.
“Each Oklahoman needs to take the responsibility to plan for themselves and their family’s future,” she says. “If we don’t, who will? Young clients and young families are most concerned about their children and premature death. Middle-income families and individuals are most focused on holding onto what they have so far accumulated and to make sure that those they love benefit when death occurs. My older clients are most concerned with preservation of their estate and protecting their adult children and/or grandchildren who may not have attained the age of majority.
“Again, each family in Oklahoma has a need to plan. It all comes down to responsibility.”
Certified Public Accountants
Benjamin Franklin’s adage, “Nothing can be said to be certain, except death and taxes,” has never seemed more true as the United States tax code only increases in size, rules and minutia.
In that vein, Amy Welch, Oklahoma Society of Certified Public Accountants director of communications, says a qualified CPA can help clarify one of life’s two certainties.
“Do you know every single tax law on reporting your income?” she asks. “If you don’t know the tax laws that protect your investments, then CPAs are there to explain them to you. CPAs, unlike regular accountants, have to take approximately 40 hours a year in continuing education to stay on top of all the accounting issues and new government rules that are passed each year.”
Beyond understanding the new rules, Welch says CPAs can also guide people financially, helping them plan their finances.
“A good investment for you might not be a good investment for me,” she says. “But sitting down with your CPA will help you be able to recognize where you need to diversify and become knowledgeable about how tax laws affect you and your financial decisions.”
Welch also serves as vice president of Oklahoma Jumpstart Education, a nonprofit organization promoting financial education, and she strongly recommends seeking out the wealth of free information available in various forms to the public before signing up with a CPA.
“I think it is extremely important to do your homework,” she says. “There are a lot of people out there with alphabet soup after their name. Know the background and training behind who the person says they are.
“If you want to know where to go and get your nails or hair done, you ask your friends. It’s the same for financial planning: Ask for references.”
To find free information about financial education, visit www.oklahomajumpstart.org or www.knowwhatcounts.org, or call the Oklahoma Society of Certified Public Accountants, the only professional organization for CPAs in Oklahoma, at (800) 522-8261. The organization provides a free CPA referral and 30-minute session for interested parties.
“We want to work with you to find somebody you are comfortable with and someone you trust,” Welch says.
Certified Financial Planners
To explain the need for a financial planner, Dr. John Yuetter, a Northeastern State University associate professor of accounting and financial planning, first talks about homebuilding.
“Few people have all the skills necessary to accomplish building a home, and hiring quality professional specialists often reduces errors and failures, creates a better product and usually costs less money in the long run,” says Yuetter, who helped establish NSU’s four-year degree for CFPs. “The same thing is true for financial management. Professional advisers in the areas of investing and saving, insuring and protecting, and planning for the future are necessary to put one’s financial house in order.
“In homebuilding, you begin with a vision for what the completed project will look like and hire an architect to help shape that plan into a reality,” he continues. “In the financial realm, a comprehensive financial planner begins with understanding what the client wants their financial future to look like, and helps build the plan that will accomplish that goal. So the CFP is like a financial architect.”
Financial planners look at the long-term goals of a person or family, using products and services to fulfill that plan. Once a plan is established, Yuetter says CFPs must determine, along with the client, who will implement and monitor the plan.
“When I see my dentist or optometric physician, they schedule the appropriate follow-up appointments,” he says. “Financial service clients should also expect that they will see their professional on some agreed-upon regular intervals.”
Wealth Management Advisers
Offering an umbrella of services, wealth management advisers can act as financial planners, work with lawyers, create or maintain trusts and help provide guidance to clients on how best to achieve financial goals.
“A wealth management adviser provides a broad array of financial solutions to help create, grow, protect and transfer wealth through a variety of solutions, strategies and approaches,” says Scott Grauer, executive vice president of wealth management, president and CEO of BOSC Inc. The firm, a subsidiary of BOK Financial, is a full-service broker/dealer providing institutional and retail brokerage services, investment banking and financial risk management.
In the case of trusts, wealth management advisers manage and invest the assets assigned to a trust, as directed by the governing trust documents established with the client.
“We offer guidance and consultation throughout the estate-planning process, including reviewing various key documents as well as consideration of the impact various life events may have on the estate plan,” Grauer says. “This process is not a one-time event, rather an ongoing relationship to ensure (the client’s) needs are continually met.
“Bank of Oklahoma’s goal is to build a close working relationship with our clients and their loved ones and be a consistent source of support and stability in the good times as well as the difficult times.”
To best benefit from a wealth management adviser, Grauer says to establish a relationship before the need exists.
“Unfortunately, many clients wait until it is too late or a problem exists before they seek the help of an adviser,” he says. “For an adviser to be effective, the entire financial picture is important.
“It is important to look at your financial picture at various stages of life,” he continues. “In comparing a young family just starting out, they should be focused on saving — whether that is for college, a new home or an emergency fund. Younger families should also think through various situations and how best to protect young children or a spouse should something unexpectedly happen. In years closer to or in retirement, make sure assets are structured to generate adequate retirement income.”
Your finances: Team approach vs. one-man army
When tackling your finances, should you surround yourself with a team of experts or find one person to manage it all?
Susan Muscari, attorney with the Estate Planning Law Center, says a team approach is best, as it is difficult for any one financial professional to be an expert in every area of financial planning.
A team should include an attorney, a Certified Public Accountant and a financial planner, she says.
“Clients generally are concerned with the cost, but the expense to their family of not having a team is higher,” she says. “Many times a team can be put into place very inexpensively, and the value of the information shared and recommendations will many times halt a person from making a decision that they haven’t looked at all the angles on.”
However, Amy Welch, Oklahoma Society of Certified Public Accountants dire
“I’d go with a CPA who was also a financial planner so that I could go to them with any financial question,” she says. “Once you find someone you trust and click with, I think it is a good idea to stick with them. Then, maybe once every couple of years, seek a second opinion. Just make sure it’s a good fit for you.”
