FPA of MN Newsletter – August 2015

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President’s Message – August, 2015

Greetings to all,

For this month’s newsletter, I wanted to take the opportunity to revisit a key theme for FPA of MN leadership for 2015: Making sure we are empowering FPA members to serve people of all income levels. As noted in the past, as a key component of the FPA of Minnesota 5-year vision, this initiative stresses the fact that it is important that collectively among our committees, we are empowering our members to serve the high net worth, people with low income, those in their “golden years”, Gen X and Gen Y, and everything in between.

This doesn’t mean that each committee should try to be things to all people but rather that we should be intentional among committees in terms of determining which “segment” we best serve, focus on how well we are doing that and how we can continue to deepen that, and then assess to make sure that each “segment” is being covered and covered effectively to best empower you as our members to serve your target markets for your paid “gig” as well those populations you are passionate about serving on a Pro Bono basis.

This concept has been embraced by each of the committees serving FPA of Minnesota in numerous ways throughout 2015. For the August newsletter, I wanted to specifically highlight some of the ways we have focused and will continue to focus on this initiative as it relates to serving low income clients on a Pro Bono basis as well as continuing to provide financial education to the public:

  • The Pro Bono committee has presented a series of workshops empowering FPA members to assist Pro Bono clients, providing a foundational “boot camp” for working with low income individuals, a session on serving members of the military and their families, and a session on Special Needs planning. The next workshop is schedule for Tuesday, September 15th, immediately following the chapter meeting on the topic of debt management/credit repair.
  • The Financial Education committee continues to collaborate with Best Prep on a number of programs, including eMentors, in which FPA volunteers are paired with high school students to discuss topics related to personal finance. For more information regarding this program, please visit the Best Prep website.
  • Through one of our long-time non-profit partners, Prepare + Prosper, FPA volunteers continue to serve as financial coaches and provide tax preparation assistance to low-and-moderate income families. For more information on getting involved, please visit the Prepare + Prosper website.
  • As a collaborative effort between the Financial Education and Pro Bono committees, FPA volunteers provided a workshop on cash flow/budgeting and offered one-on-one financial coaching to 75 Americorp volunteers serving through College Possible.
  • Members of the Financial Education committee participated at the 2015 STEM Expo for approximately 2,500 6th grade students in the Minneapolis Public School system. FPA participated in Best Prep’s “Financial Alley” program, designed to increase awareness of various financial literacy topics as well as to learn more about career options in financial services.
  • Our Pro Bono volunteers continue to assist low-income clients on a one-on-one basis who request assistance through our website.
  • The 6th annual Twin Cities Financial Planning Day will take place on Saturday, October 17th at the Wilder Center in St. Paul. The event is free and open to the public and features a series of workshops and one-on-one financial planning sessions. Last year, we attracted over 200 participants!For more information, please visit the Financial Planning Day website.

A huge thanks to all of our tremendous Financial Education and Pro Bono committee members and volunteers for all of your efforts. If you would like to find out more about getting involved, please visit our website to explore volunteer opportunities and express your interest in participating.

As always, feel free to let me or any of our Board members know of any questions, comments, or concerns that you have. We strive to “ask-listen-respond.”

Steve Gilbertson, CFP®
Accredited Investors, Inc.

Deadline Approaching: FPA Diversity Scholarship to attend FPA BE 2015

Applications are due August 4 for an FPA Diversity Scholarship to attend FPA’s Annual Conference: FPA BE 2015 in Boston. Scholarship awards include 1-year FPA membership, conference admission, chapter dues, and travel expenses.

Criteria includes:

  • Raising awareness of the profession in diverse communities;
  • Serving diverse communities with financial planning;
  • Increasing professional opportunities for diverse communities within the financial planning profession.

Please encourage your members to Apply now!

$50 Off Registration - FPA Annual Conference - use promo code AFBE15

Register now to attend the advanced technical conference for CFP® professionals – the FPA Annual Conference – BE Boston 2015 that will be held on September 26-28 to gain new practice management knowledge, skills and resources. The schedule is jam-packed with insightful sessions that will help attendees be more knowledgeable professionals and better business owners. A Business Consulting Lounge will be available for attendees to schedule appointments to meet with some of the profession’s best consultants and coaches! It will be a great opportunity to talk about your business challenges and gain valuable insight into marketing, technology, success planning, business planning and much more. Registration is open and members can now save with terrific early bird pricing. Advanced pricing ends on August 14. Register today!

Thanks to July's Volunteers

Submitted by: Lisa Stitzel, CFP® - Financial Education Committee Member

Many thanks to volunteers; Mike Erpenbach, Bill Wixon and Kelly Olson Pederson for volunteering to present various financial planning topics for employees of Best Buy Corporation during the month of July. Their efforts help to promote the FPA of Minnesota, as well as supporting a financially literate community.

Much thanks to you all.

Recap: FPAMN K’Nex - Discovering Growth and Continuity with Generational Partner(s)

At the K’Nex event on July 22nd about 30 attendees learned about adding a generational partner to their business with the benefit of increased growth and continuity. Aaron Hasler presented three main strategies that advisors are implementing, drawing upon the MN Twins as an analogy. The first strategy is the Brian Dozier, who was a late round draft pick that the Twins waited patiently to develop into the All-Star he is today. The second strategy is the Miguel Sano, who was a highly rated prospect by the time he was just 16 years old and has quickly progressed to the major leagues. Lastly, the Ervin Santana, the proven veteran the Twins signed to a large multi-year contract. While each of these strategies have their benefits and drawbacks, the approach suggested by Aaron is to first identify your objectives and second evaluate all options. If you missed the event and are interested in learning more please contact Aaron - 612-208-0653.

Shout Out for Financial Planning Day Volunteers

Financial Planning Day!!
October 17, 2015
Wilder Center - St. Paul
10:00 am – 2:00 pm
Need volunteers for:

One-on-One 15 minute reviews
Group educational seminars
(Please note - you must be a
CFP® in good standing to volunteer)

Sign – up to volunteer @

SYMPOSIUM BREAKOUT - November 3, ERISA Fiduciary Overview

Register Now and save $100

Presentation Scheduled for Tuesday, 2:00-3:00 pm
Pending CE: 1 CFP, 1 NASBA/CPE, 1 MN insurance, 1 WI insurance, 1 CIMA, 1 CLE Standard

During the Financial Planning Association of Minnesota Symposium on November 3, the timely topic of retirement plan fiduciary responsibility will be addressed. Two ERISA fiduciaries, Greg Moerchen of QBOX Fiduciary Solutions and Chuck Self of iSectors will present answers to questions that retirement plan advisors are asking:

  • How am I a fiduciary as a retirement plan advisor?
  • How will recent litigation and regulatory changes affect my status as a fiduciary?
  • What can be done to mitigate the fiduciary risk of being an advisor?
  • What types of investment choices will meet investment fiduciary standards
  • What is the latest research on overcoming the ineffectiveness of typical asset allocation programs?

Mr. Moerchen, with over 20 years in the industry, started QBOX Fiduciary Solutions to meet the investment fiduciary needs of the retirement plan industry. He has over 25 years of experience in the investment management industry. He started in the broker dealer network and transitioned to a registered investment advisor (RIA) in 2008. Most recently he has developed open architecture 401k products for socially responsible investment clients and FiduciarySelect.

Mr. Moerchen is currently focusing on developing open architecture qualified plan products for RIAs and RIA Firms. He feels that the qualified plan industry is at a tipping point. Participants are demanding investment and fee transparency – both supplied by advisors moving to the fiduciary standards required of an RIA. QBOX’s sole focus is to revolutionize the qualified plan marketplace.

Mr. Self has over 30 years of experience in the investment management industry and his background is diverse. The early portion of his career focused on managing multi-billion dollar fixed income portfolios for such firms as ABN AMRO and Prudential. Recently, he has been involved in portfolio management as the CIO for the Teachers’ Retirement System of Illinois and marketing of alternative investments. He has been interviewed in various media including Fox Business News, Bloomberg Radio, and The Wall Street Journal.

Mr. Self anticipates the industry will continue to shift towards low cost, transparent and liquid outsourced investment solutions. His overarching objective is to enhance iSectors position in the marketplace to capitalize on this transition.

SYMPOSIUM BREAKOUT - November 4, What Gives? The How, When, and What of Charitable Giving

Register Now and save $100

Presentation Scheduled for Wednesday, 1:15-2:15 pm
Pending CE: 1 CFP, 1 NASBA/CPE, 1 MN insurance, 1 WI insurance, 1 CIMA, 1 CLE Standard

Your clients already have charitable interests, passions, and the desire to create change and make the world a better place. As their financial advisor, you know that when done right charitable giving can also benefit your clients by reducing income taxes and avoiding capital gains taxes. But while reducing taxes is a great benefit of charitable giving, it is rarely the primary factor in a client’s decision to give back.

Many advisors feel that discussing charitable giving with clients is too “personal”, or that they are not qualified to dig deeper into their clients’ motivations for giving. As a result, advisors may be missing opportunities to build deeper relationships, including multi‑generational connections that can expand the scope of a client engagement. In the extreme, advisors may even miss signals that could affect a client’s entire financial plan. For example, a typical estate planning conversation may start from an assumption that a client’s goal is to pass the “max after tax” to their descendants. For clients with strong charitable motivation, making more significant charitable gifts during their lifetimes or at death may take priority, even if estate taxes are not a concern.

Once you understand a client’s reasons for giving back, and the types of charitable gifts that are truly meaningful to them, you can begin to apply charitable planning techniques that can increase the impact of a client’s gift while also amplifying the tax benefits. As with all aspects of planning, it is important not to let the technique drive the plan, and to always understand the “Why” of a gift before implementing the “How”.

Here are some examples of tax‑favored charitable gifts, from a few simple options to some more complex techniques:

  1. A cash gift can be made by check or credit card. This method of giving is simple for clients and is deductible for income tax purposes.
  2. Giving appreciated stock to charity is easy and has an added tax benefit:your clients receive an income tax deduction for the fair market value of the stock, and they do not pay income tax on capital gains associated with its sale.
  3. By creating a Donor Advised Fund a client can get a current tax deduction and recommend grants to charities from the fund in future years and even over multiple generations. Donor Advised Funds are especially suited to donors in high income years or with significantly appreciated stock positions.
  4. Clients’ tax-deferred retirement accounts are subject to both income tax and, to the extent there remains a balance in the account at death, estate tax. Clients can name charitable organizations as a beneficiary of some or all of a retirement account, avoid both taxes, and benefit charity. The client simply requests a beneficiary designation change form from the retirement account custodian.
  5. Your clients can also leave a gift to charity at death under their estate plan. An attorney can help craft language for a will or revocable trust that will accomplish the gift during the estate or trust administration process.
  6. If clients want to make a charitable gift now but retain an income stream, they might consider a charitable gift annuity or a charitable remainder trust. Both of these techniques can provide income to a client during their lifetimes, generate a current income tax deduction, and provide a benefit to charity in the future.

For any type of charitable gift, comprehending a client’s motivation for giving will inform the choice of vehicle, its timing, and the assets used. In our session at the FPA Symposium on November 4, “What Gives: The What, When, and How of Giving,” we will dive deeper into discovering a client’s charitable “Why”, and discuss how to apply this understanding through real world examples of transformational gifts that have changed lives for the better.

FPAMN K’Nex - How to Serve Gen XY Clients – Real Life Examples

Coming up on September 23rd will be a K’Nex event (open to all, not just NexGen) that will provide a window into several models for serving Gen X and Gen Y clients. This won’t be a presentation on theory, instead, it will offer specific examples of advisors helping real life Gen X and Gen Y clients. We will cover the client facts and circumstances, the recommendations and advise given and the compensation structure. While your services and value proposition may differ from the advisors presenting these cases, you’ll benefit from seeing how some of your peers are profitably serving this demographic. Specific event details and registration information forthcoming.

Ramifications of SCOTUS Decision Regarding Same-sex Marriage

Submitted by: Steve Fischer, CPA, CFP® - Professional Issues Committee Member

I include below the eloquently written final paragraphs of the recent United States Supreme Court ruling in the case of Obergefell v. Hodges.

“No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice, and family. In forming a marital union, two people become something greater than once they were. As some of the petitioners in these cases demonstrate, marriage embodies a love that may endure even past death. It would misunderstand these men and women to say they disrespect the idea of marriage. Their plea is that they do respect it, respect it so deeply that they seek to find its fulfillment for themselves. Their hope is not to be condemned to live in loneliness, excluded from one of civilization’s oldest institutions. They ask for equal dignity in the eyes of the law.The constitution grants them that right.

The judgement of the Court of Appeals for the Sixth Circuit is reversed.”

It is so ordered.

The Supreme Court, in its decision, ruled that no state can deny a marriage license to two people of the same sex and that all states must recognize lawful same-sex marriages of other states.

While there is a very broad difference in public opinion about the topic I think it fair to say that same-sex marriage is now the law of the land and is here to stay.

How does this ruling fit into our profession and what are just some of the ramifications for our present and possibly future same-sex couples, married or not?

This ruling carries with it enormous changes when planning for a same sex couple.Things that formerly were complex and confusing now become simpler and more uniform with the planning that is done with heterosexual couples.

This topic is far too broad to be covered in the limited space we have available but I will try to at least hit on some of the major areas.

With this Supreme Court decision same sex married couples nationwide won’t need to file different state and federal tax returns or use complicated estate planning techniques to protect families if a spouse dies.

They will also be afforded spousal and survivor benefits from the Social Security Administration no matter where they live in the United States.

Much of the initial work with same sex clients who are married or get married will be to unravel years of advanced financial and legal planning. Clients who purchased life insurance policies to cover estate taxes may not need those policies for that purpose because now all same sex married couples will be able to pass on assets to their spouse tax free.

Like heterosexual couples, gay couples will have an unlimited marriage exclusion from federal estate taxes nationwide and portability of the deceased spouse’s unused exclusion amount.

States must also grant same-sex married couples equal rights when it comes to adopting children. Parenthood brings with it a whole new set of financial planning considerations.

In the long-run it makes the planning easier and better since if a same-sex couple is married, Social Security and pension strategies that would not otherwise be available can now be used. This alone potentially can secure a better retirement for committed gay and lesbian couples who get married.

Same-sex married couples, ironically, also now have access to divorces because of the court’s ruling. Previously, a same-sex couple married in a state such as Massachusetts or Minnesota with marriage equality who moved to one without such as Texas, could not be granted a divorce because that state (Texas) did not recognize the marriage.

Some same-sex couples may choose to not marry. In these cases the planning that has been done in the past will still be necessary. Some same-sex couples may not marry, particularly ones living in states where employment discrimination still exists. Marriage licenses are a matter of public record and some may worry that they could be fired from their job.

The Supreme Court ruling also brings the potential for a number of issues and changes that are less obvious and goes well beyond the scope of this article. For example: how will this affect employers that previously offered health insurance benefits to spouses but not same-sex partners?

This is but a brief summary of the most obvious things that will change with the Supreme Court’s ruling. As time goes by, other issues will undoubtedly arise. I am sure each of you can add others you think of to the list as well.

FPA MentorMatch: providing guidance to advance in your career

As a busy financial planner, you have probably thought that getting some support and guidance from other planners who have “been there, done that” would be helpful. Well, FPA makes it easy to connect with planners who are interested in being mentors. FPA MentorMatch will help you learn best practices and tips from experienced practitioners who are interested in connecting with you. This program allows you the flexibility to create a mentoring relationship based on your unique needs. Sign up today!

Check out the all-new MyFPA!

The newly-designed FPA member-only website now features the latest FPA news, research, benefits, educational opportunities and trending member-to-member discussions. The new landing page makes it easier to find relevant, up-to-date content. And the page is updated every week, so check back often! Login anytime to see what’s happening in YOUR association and see how MyFPA is your One Connection™ to all things FPA!

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ADV-Platinum Partner Spotlight: Sit Mutual Funds

Steve Benjamin

ERISA, the Younger Generation and Preparing for Retirement

Retirement is like a long vacation in Las Vegas. The goal is to enjoy it to the fullest, but not so fully that you run out of money.”
-- Jonathan Clements

Forty-one years ago, President Ford signed into law the Employee Retirement Income Security Act (“ERISA”), widely hailed and recognized as the foundation of retirement plan law today. Some wags have joked that ERISA stands for Every Ridiculous Idea Since Adam but, prior to its passage, it was no laughing matter to learn how some retirement plans were being administered. For example, when the Studebaker plant closed in 1963, its pension plan was so poorly funded that thousands of dedicated workers received distributions worth a fraction of the retirement benefits they’d been promised. Thousands more received nothing at all. The demise of Studebaker’s pension plan drew national attention and was the impetus for the passage of ERISA eleven years later.

Some of the new standards ERISA established for private sector retirement plans included:

  • how and when a company must provide plan information to employees
  • how an employee can enter a plan, become fully vested and receive benefits
  • how plan trustees and others must handle plan assets
  • how and when a company must contribute to its plan
  • how plan assets are protected and handled if a company goes out of business

When ERISA passed, the typical company retirement plan was a pension. With this type of retirement plan, a company sets aside and invests money for employees, bears all of the investment risk and, based on a pre-determined benefit formula, provides monthly checks to retirees throughout retirement. Today, pension plans are scarce and have been replaced with defined contribution plans (e.g. 401(k) plans) where employees contribute their own money, may receive a company match and/or a profit sharing contribution, select their investments and bear all of the investment risk. The funds available at retirement depend on the amount contributed, the performance of the investments and one’s ability to manage a portfolio.

For those not covered by a retirement plan, ERISA let individuals contribute up to $1,500 each year to something new – an Individual Retirement Account (IRA). A few years later, the law was expanded to allow all workers to save up to $2,000 and today, annual contribution limits are higher still.

Although there are many different ways to save for retirement, Americans are doing a poor job doing so, especially young people. The Employee Benefit Research Institute reports that less than half of those between the ages of 25-34 are saving for retirement and a whopping 70% of them have less than $10,000 put away. Many of them may be weighed down in student loan debt, find it difficult to see themselves retired and perhaps figure that they still have plenty of years to save for retirement.

But saving at a young age allows more time for funds to compound. And since determining how much is necessary to save for retirement can be difficult, the American Savings Education Council created the “Ballpark Estimate” (www.choosetosave.org/ballpark) which can help individuals determine approximately how much to save each year so they can retire comfortably someday.

With the introduction of the Roth IRA in 1998, there’s no time like the present for young folks – and all of us – to set aside money for retirement. Unlike Traditional IRA distributions, Roth IRA distributions have the potential to be taken tax-free, which could pay off nicely in retirement.

At the September 15th meeting, Mike Brilley, President and Chief Fixed Income Officer of Sit Investment Fixed Income Advisors, will provide an update on the Sit MinnesotaTax-Free Income Fund and the fixed income markets. If you’re unable to attend, contact Steve Benjamin for a copy of Mike’s presentation (spb@sitinvest.com or 612-359-2554).