Sue Ostrowski

Your company offers medical benefits, and it offers pharmacy benefits. But if you are not integrating these two components, you may be spending more than you need to, says Mark Haegele, director, sales and account management at HealthLink.

“Having both data sets boosts your ability to see the whole picture of your members and your costs,” says Haegele. “It really opens the door for new opportunities to control costs. If you just have the medical claims data, or just the pharmacy claims data, that only gives you part of the picture. But when you integrate that information and tie the pharmacy claim information into the medical claim information, then, all of a sudden you start to see the full story relative to specific members and, in particular, specific cost variances. And that really opens the door to do some pretty creative things with information, ultimately allowing you to control costs.”

Smart Business spoke with Haegele about steps an employer — particularly a self-insured employer — can take to manage health plan costs.

Why should employers integrate medical and pharmacy claims data?

Having that data under one umbrella can help improve care by creating a complete picture of a member’s health. Integration increases the identification rate for chronic conditions and care management programs as a result of improved access to key data.

It allows for better case management, increasing the likelihood that patients will receive the correct medication at the right time, avoid negative drug interactions and help members comply with prescribed therapies. In addition, patients with chronic diseases often do not get the help they need, resulting in more severe and costly complications, and higher rates of diseases and death.

How can an employer use integrated data to manage costs?

If you combine your pharmacy and medical data, you can then sort your data by members who have more than five prescriptions per year. You can further refine that information to determine from how many different physicians a member may be getting a single prescription.

For example, oxycodone is a very common concern in the marketplace, and an employer may have health plan members who are getting that prescription from five different providers. Without that integrated data, you wouldn’t know that. But by targeting controlled substances, you can identify those who are abusing the plan and then, in conjunction with your consultant or broker, notify those prescribing physicians so that they become aware of that situation.

Employers are often shocked to learn what is in the data. A plan member who is getting 15 or 16 prescriptions per month from 10 different doctors is clearly problematic, and identifying those people can help you control your costs.

What other action can an employer take using integrated data?

The second specific action that employers can take to control costs is to look at the use of antidepressants. This is a high-cost category, often in the top three most used prescriptions, which presents an opportunity.

Antidepressants are generally intended to get a person through a tough time, for example, as the result of a death or a highly stressful situation. Most are not really intended for chronic continuation for multiple years. When an employer has the data, it can identify those members who have been on antidepressants for more than a six-month period. Then you can introduce that member to a case manager, or into an employee assistance program, or refer that person to a psychiatrist for one-on-one therapy. Oftentimes, with three or four session — which are typically purchased by the employer anyway in an EAP — the member feels better and is able to get off of those drugs, reducing both usage and costs.

How can integrating medical and pharmacy data help employers assist members with chronic illnesses?

Employers can pull the data for members who have been diagnosed with one of five chronic illnesses — cardiovascular disease, hypertension, asthma, diabetes and COPD — then, with their consultant, identify whether those members are on a routine and taking their prescriptions for that specific illness. You can see if members are compliant, based on their refills, and can identify those who are not.

As an employer, you can then do a number of things to increase compliance within those categories. The employer can offer to pay for those drugs, because even though they are generally inexpensive, some members may not take them if they are living paycheck to paycheck. By simply paying for those drugs for its members, an employer could save the plan a lot of money.

You can also make a strategic decision as an employer, especially in a self-funded environment, to get members to work toward trying to achieve a better compliance rate. You can use your medical data to identify those members who have these diagnoses and couple that with your pharmacy data to identify those who are taking prescriptions.

Look at a 12-month period and how many scripts per month members are taking to identify any tailing-off patterns because refills have not been made. Maybe someone filled the first 90-day prescription, and the second one, but then never got it again.

What happened? How do you get the member back on track? Does the employer need to pay for the drugs? Do you need to assign a case manager to that member?

All of these things are fairly simple, straightforward specific actions that employers can take in their health plan to control costs and improve the health of their members.

Mark Haegele is director, sales and account management at HealthLink. Reach him at (314) 925-6310 or

Dr. Nan Boden was the executive vice president at Myricom, a high-performance computer networking spinoff from Caltech that she helped found. Although she had steadily risen through the company and knew about the technical side of the business, she knew she wasn’t as savvy about the business side.

“I started looking at what I needed to do to become more effective in my role, and I kept thinking, ‘There’s just got to be more leverage from deepening my understanding of the business side,’” says Boden, who now serves as Myricom’s CEO. “So, I started looking at MBA programs. Given my technical background, I knew I wanted the most quantitative program that I could find, but one with a part-time schedule that would allow me to enhance my education while still working full time. UCLA Anderson’s Executive MBA program met all of my requirements, and I knew right away that it was the perfect fit for me.”

Smart Business spoke with Boden about how UCLA Anderson’s EMBA program can take your career to the next level and beyond.

How did what you learned in the program translate into your day job?

For me, the relevance of the EMBA program was instantaneous. The program made an enormous difference not only in that I gained training in many new functional areas, but I also gained broad new frameworks for analyzing problems and developing solutions. Learning from my classmates, who each typically had five to 10 years of work experience in a wide variety of fields, was also an integral part of the program’s value. During our class weekends, I felt that I soaked in knowledge, and then back in the office Monday morning, I’d see immediately how that knowledge could be applied. I use what I learned at Anderson every single day at work.

The EMBA program content was delivered very efficiently. The structure of the EMBA program meant that I could attain my MBA degree and simultaneously apply that knowledge in my full-time job. The EMBA program gave me the ability to perform my present job at a much higher level, and also improve my understanding of the larger business picture of our industry.

How did the newfound knowledge impact your business and employees?

At my company, we had long struggled with certain business problems that seemed to never get solved. After I started bringing back knowledge I’d gained in the Anderson EMBA program, our employees began to see that some of these problems could actually be fixed! We could then effectively move on to tackle new challenges and objectives.

How does the classroom experience differ from taking courses online?

At the outset of the EMBA program, if I had been given the option to do an online-only program, I would have taken it — and, it would have been the biggest mistake I could have made. I would have missed a great deal of what I ultimately got out of the program. Through the classroom and study group learning, I honed my skills for working with teams of different-thinking individuals. Before the EMBA program, I was accustomed to working with technical people who think much the same way as I. However, when I first found myself in a group with strong strategic marketing people, strong finance people, etc., I found that they don’t think about problems the same way. I then saw the power of marshaling the talents of a diverse team to produce results that a single person could not readily achieve.

How does working in study groups enhance the EMBA experience?

The effectiveness of the study group model was a big surprise to me. The problems one works on in business school are different from math problems. There’s not one answer that everyone is going to agree on; there are many different ways to tackle a business problem. Study groups were an effective vehicle to tackle more complex real-world problems by leveraging the different talents and viewpoints of each member. It was an important part of business school to learn different functional techniques, but also to learn how to apply those techniques within a group of differently motivated, resourced and skilled people. I may well have gained the most lasting and relevant skills from my study group experience. Intense academic coursework combined with study groups was a powerful combination.

How did the program change the way you think?

Throughout my education and career, I have approached problems from a technical person’s viewpoint. If a problem is well-formed, then it should have a function, inputs and outputs, and the answer should always be the same. From my first days in the Anderson EMBA program, I saw example after example where there could be many solutions to a business problem that were ‘correct,’ as they had been analytically thought through and the logical arguments for the solution hung together.

For instance, if a company is preparing to go to market with a new product, what should be the marketing strategy based on who are the customers, competition, etc. The problem analysis and the solutions were developed using thinking frameworks, not using formulas. I had always thought that if there weren’t a formula, then there must not be substance. At Anderson, I learned that one can get so much further by taking a framework and using it to think through the problem elements. Applying frameworks to real world problems has also greatly improved the efficiency of our strategic planning within my company.

Nan Boden is CEO of Myricom. Reach her at (626) 821-5555 or

When business owners run into a potential legal issue, too often, they call an attorney, get an answer and move on. But developing a closer, long-term relationship with outside counsel can put a client in a stronger position when the need for services arises, says Michael P. Wippler, recently appointed managing member for Dykema Gossett LLP’s Los Angeles office.

“Too often, businesses and individuals view lawyers like the dentist — they wait until their tooth hurts before they seek advice,” says Wippler. “There’s a complacency. Nine times out of 10, you’re not going to have a problem, but there is that one time when getting early advice can prevent you from making a really big mistake.”

Smart Business spoke with Wippler about what to look for in outside counsel to ensure you receive high-quality service at a fair price.

How can you find the right attorney to meet your needs?

Referrals are the best way to find the right person for your needs. Who do you know and respect in business that has had success with an attorney they like?

Once you’ve identified potential counsel, start asking questions. First, make sure they have the experience and expertise to properly handle your matter. If someone is a jack-of-all-trades, you have to wonder about his or her expertise for your specific area.

Then, ask the lawyer about the level of service you can expect. How quickly do they respond to requests and phone calls? In the past, it was OK to respond within 24 hours. But today, if you call or e-mail your attorney, you should receive a response right away. You should never have to call twice.

Ask the lawyer how they will keep you informed of matters pertaining to your case or transaction. Too often, outside counsel will know about an important issue for weeks or months but not notify the client until the last minute.

As part of these conversations, determine if you personally like and trust the attorney. Is the attorney someone you can work with? The relationship between an attorney and client is fundamentally one of trust. Without trust, it’s very difficult to obtain what the client really needs from their attorney.

How can a client get a good price and create predictability in billing?

You should expect quality legal services at a fair price.

Ask what the rates are, what the billing procedures are and what you can expect to pay for a given matter. A client should never be surprised by the bill.

Ask what the attorney can do to give you certainty and some control over expenses. Today’s consumers of legal services can be more aggressive and ask for pricing models beyond the typical hourly rate. Asking for — and getting — pricing models such as flat fees, blended rates and volume discounts can provide increased predictability. For matters such as a real estate lease or a patent application, an attorney may agree to a flat fee. If you have a mix of timekeepers from a senior partner to a paralegal working on a matter, you can request a blended rate in which you would be charged the same hourly rate for all people working on the matter. And with certain hybrid models, the attorney’s compensation varies depending on whether there is a successful outcome. Other models include contingencies and partial contingencies. Clients can also request volume discounts and early payment discounts.

Should every business have outside counsel?

In today’s legal environment it is important to have a good lawyer that you can call on short notice. Anyone dealing with employees, contracts, financing and/or products will eventually have legal issues.

Before you have a problem, it’s a good idea to retain a lawyer you can trust. It is typically less expensive to pay for advice and guidance up front than for litigation or some other problem later on.

You may only need an attorney once in a while, but it’s good to know that attorney before you need him or her, and for the attorney to know you and your business.

Every business has issues that are particular and important to it.  If the attorney knows what is important to your business, it’s easier for the attorney to give you advice that benefits you. However, this type of knowledge about you and your business can only be learned over time by working together on different matters.

Always consider your potential exposure on the downside. Not everything goes as planned.

Michael P. Wippler is managing member for Dykema Gossett LLP’s Los Angeles office. Reach him at (213) 457-1717 or

You think it can’t happen to you. Your employees are honest, you trust them and they would never steal from you.

But no company is exempt from the threat of fraud, says Frank A. Suponcic, CPA, CFE, CFF, principal in the Valuation & Litigation Advisory Services Group at Skoda Minotti.

“Fraud is out there, it is increasing and companies need to be more vigilant,” says Suponcic. “They need to not be so trusting and raise their level of awareness.”

Smart Business spoke with Suponcic about how to reduce the risk of your business becoming a victim of fraud.

How does fraud occur?

Ninety percent of fraud occurs in disbursements, money leaving the company in the form of unauthorized checks, electronic funds transfers and debit transactions. Employees are not as likely to steal cash receipts, but it’s easy to write a check to yourself, submit your personal credit card statement to the corporation or commit fraud on an expense report.

There are many ways that employees can unlawfully enrich themselves, so within those mechanisms, there have to be policies and procedures in place. For example, there should always be substantiating documents for disbursements. Too many companies simply pay bills without documentation and aren’t conscientious about the fact that they may not be paying for what they think or that there may be overcharges. They just don’t take the time to approve invoices and match them to other corroborating documentation.

Fraud is occurring more often in this economy as a spouse loses a job or an employee is threatened with home foreclosure or is struggling to pay their bills. And once they have a reason or rationalization, the next step is figuring out how to exploit the system to fulfill that need. Smart people with criminal intent can identify the internal control weaknesses. They know you aren’t looking at the bank statements and invoices to be paid or that the check plate or blank check stock is not secured. They know that you trust them and, as a result, will take advantage of that.

Why should businesses be concerned about fraud if they have good relationships with their employees?

Occurrences of misconduct happen in every occupation, from professional organizations to religious organizations to not-for-profit organizations to law enforcement, legal and accounting firms, and at every level, from the receptionist to the CEO.

You can’t let your guard down. Fraud is based on a violation of trust, and the more that you trust someone, the more you should have your guard up. Many cases have involved family members, people who have known each other since childhood, or even the best man at your wedding. There are no boundaries as far as who commits fraud, and if you think it can’t happen to you, invite a forensic professional into your business for an hour and he or she can likely show you several places in which you have inadequate internal controls.

How can having a forensic professional perform a fraud assessment help prevent fraud?

During a fraud assessment, the forensic accountant will interview everyone in the accounting cycle, identify the weaknesses and provide the company with suggestions for enhancement of internal controls. If there are weaknesses that can be exploited, it is well worth the cost of the assessment. It’s not uncommon for the forensic CPA to compile many valuable recommendations, some of which have a cost attached and some of which can be implemented for free.

How can surprise audits help deter fraud?

Surprise audits review specific transactions, and the fact that employees can’t prepare for them can be a deterrent. This is a valuable internal control mechanism, especially in smaller companies.

People may be aware that there is a corporate policy against fraud, but if they recognize that no one is looking over their shoulder, bringing in an outside forensic CPA can provide management with assurance that there is an invoice for every disbursement, that credit card bills don’t reflect personal purchases, that the person who issues payroll isn’t paying themselves too much, and that specific controls are operating and being adhered to.

What other steps can a business take to help prevent fraud?

Have people rotate jobs, so you don’t have just one person in a position in which fraud could occur. You can also offer financial incentives to employees to report suspicious activity. Also, have bank statements sent to your house. Don’t just hand them over to your bookkeeper. Actually look at the disbursements and examine what is being paid out of the account.

In addition, the tone at the top is critical. Employees need to see that executives are ethically handling business transactions and instilling that the company will do things right. Require employees to sign a fraud policy that discusses, in writing, the definition of stealing and what will happen should an employee decide to commit a financial crime. Make it clear that you will press criminal charges and pursue every civil course for restitution. Fraud has put companies out of businesses. Employees need to understand that everyone has a stake in making sure that the company continues and that one unethical person can jeopardize that.

Circulate the fraud policy annually, meet with the employees and have them acknowledge that they have read it, that they have not perpetrated a fraud and that they understand what stealing is. This is also a good time to ask if they have noticed anything unusual, such as someone cheating on an expense report or padding payroll. Give employees the opportunity to talk to you. You can also utilize a fraud hotline so employees can anonymously report suspicious financial activity.

Fraud can’t be eliminated, but by taking steps to implement effective internal controls, you can reduce your risk of becoming a victim.

Frank A. Suponcic, CPA, CFE, CFF, is a principal in the Valuation & Litigation Advisory Services Group at Skoda Minotti. Reach him at (440) 449-6800 or

The investment market has been rocky the past few years, and there is no indication that volatility is going to change any time soon.

But current market conditions make it an excellent time to invest in dividend-paying stocks, says Sonia Mintun, CFA, vice president with Ancora Advisors LLC.

“Given the historically low bond yield environment, dividend-paying stocks are an attractive alternative,” says Mintun. “Right now, you can assemble a portfolio of quality stocks with a yield of 3 to 3.5 percent, in comparison to the 10-year Treasury yield of approximately 2 percent. Dividend-paying stocks also offer downside protection, providing a cushion during negative equity markets, while also allowing for the capture of upside potential.”

Smart Business spoke with Mintun about why dividend-paying stocks are a smart investment in today’s economy.

Why does dividend-oriented investing make sense in today’s markets?

There are several reasons: Dividend-paying stocks are less volatile than non-payers and they have been proven to have a lower standard deviation, which is a measure of risk. Dividends have accounted for 40 percent of total returns in the market since 1940, and dividend-paying stocks have outperformed non-dividend-paying stocks over the last 80 years. These stocks tend to be relatively stable over time because dividends are a component of earnings that are less subject to speculation. In addition, dividends are sticky, and tend not to fall, as companies are reluctant to cut them. Dividends allow investors to collect some income while they’re waiting for the fundamentals of the company to improve.

Furthermore, payout ratios are hovering at extremely low levels historically. They tend to revert to the mean over periods of two to three years. The current payout ratio is 30 percent, compared to a historical rate of 52 percent. With increased confidence and economic stabilization, we will likely see deployment of large cash balances on companies’ balance sheets toward higher payouts.

Dividend yields are also below long-term averages of 2.8 percent. Currently, yields are about 2 percent, despite cash balances being at record highs. Moreover, earnings are recovering from the financial crisis and balance sheets are healthy, so there is good potential over the next year or two that yields will rise due to increased payout ratios.

Last, given today’s bond yields, the S&P earnings yield — which is the inverse of the price/earnings ratio — is pretty attractive relative to the 10-year Treasury on a historical basis.

How does inflation impact dividend-paying stocks?

Historically, dividends have grown faster than the rate of inflation in the U.S. With 3 percent inflation now, short-term, high-quality, fixed-income instruments are losing purchasing power. You can get a 3 or 3.5 percent dividend yield on a diversified portfolio of good quality stocks, and have potential for income growth relative to the fixed coupon on bonds.

The average dividend income from a portfolio of S&P indexed stocks has grown at a rate of 5 percent per year since inception in 1957, which is one full percentage point over the rate of inflation in the same time period. As a result, dividend stocks offer both the potential for capital appreciation and income growth. Dividends increased more than 10 percent in 2011, on top of a 10 percent gain in 2010. Also, dividend-paying stocks have outperformed more often in higher inflationary times.

What vehicles can be used to implement a dividend-paying strategy?

Investors can buy individual equities in portfolios that are sizable enough to diversify the risk of one particular issue or sector. While dividend-paying stocks tend to be less volatile, it’s prudent to make sure your portfolio is not too concentrated in one sector or company.

Investors can also buy exchange traded funds, or ETFs, that concentrate on dividend-paying stocks. ETFs are a cost-effective way to invest in dividend payers while achieving diversification in smaller accounts. There are also mutual funds that focus on dividend-paying companies. These typically have higher expense ratios than exchange traded funds, but the fund manager can trade them more tactically than ETFs, which are passively managed and based on an index.

Are all dividend-paying stocks the same?

All dividend-paying stocks are not the same. It’s very important to do your homework on the company when you are buying individual stocks. Higher yield stocks are associated with better subsequent performance, but only to a degree. Those in the 3 to 6 percent dividend yield bucket have outperformed their peers, both those with higher dividend yields and those with lower yields.

Stocks with yields in the 6 to 9 percent range and above tend to have a higher standard deviation, or risk. Sometimes investors fall into the yield trap, buying troubled companies that cannot sustain high payouts, leading to cuts in their dividends.

Investors should seek stocks in which the dividend can be sustained, potentially evidenced by a low payout ratio and ample net cash or share buybacks. Look for companies that have consistent cash flow, a healthy balance sheet for their industry and that increase their dividends consistently.

Given today’s historically low bond yields, the potential for inflation down the road, as well as the other reasons I detailed, investing in dividend-paying stocks makes sense. With the expectation that volatility is going to continue due to our upcoming election and events in Europe, investing in less volatile stocks paying dividends is a sound strategy. Furthermore, based on price/earnings ratios and the potential for improving earnings, the disparity between the earnings yield on the S&P relative to 10-year Treasury bonds make dividend stocks an attractive investment.

Sonia Mintun, CFA, is a vice president as well as an Investment Advisor Representative of Ancora Advisors LLC (an SEC Registered Investment Advisor). In addition, she is also a Registered Representative of Ancora Securities, Inc. (Member FINRA/SIPC). Reach her at (216) 593-5066 or

As a business leader, you go to great extents to protect your business. But what are you doing to protect your personal assets?

Too many times, business owners can cite chapter and verse of their business insurance coverage but are at a loss when it comes to their personal liability, says Christine Kleintop, personal lines producer at SeibertKeck.

“Everything that you own, your assets, your future earnings, everything that you want to protect, could be at risk if you are sued,” says Kleintop. “Everyone wants to protect their belongings, but liability is the bigger exposure.”

Smart Business spoke with Kleintop about how high-net-worth individuals can use insurance to protect their personal assets should they be sued.

Where should you start with coverage?

Start at the most basic level, which is auto, home and any specialty item policies, such as a boat owner’s policy or motorcycle policy. Look at the basic limit of liability. And never go with the state minimum, regardless of what your assets are — purchase no less than $300,000 to $500,000 of coverage as a starting point.

What is the next step?

Move on to umbrella coverage. This coverage, which everyone should have, covers for losses above the limits of the underlying policies. If you can get sued, you should have an umbrella. It picks up where the other policies leave off.

It gives you a higher dollar amount, but can also be broader than the underlying policies. For example, you could be sued for slander. Your homeowner’s policy may not cover that, but the umbrella may pick it up.

How much coverage do you need?

There is no right amount of coverage. For someone who doesn’t experience an adverse event, $1 million in coverage may be enough. But someone who is texting and hits a school bus may not have purchased enough coverage.

A good starting point is to look at your assets, your exposure and your future earnings, and consider how much risk you are comfortable with and how much risk you want to transfer. Are you very aggressive and willing to take on more risk, or are you more conservative and want to go with a safer bet by purchasing higher limits?

View the decision through the lens of how a lawsuit could affect not only you but your family. Some people may be risk-takers, but they don’t want to risk something that can affect their whole family.

Also, look for red flags that could put a target on you for a possible lawsuit. For example, if you own a pool or a dog, if you have teenagers on social websites or teenage drivers. Also at higher risk are highly visible people like coaches, business owners or politicians.

High-net-worth individuals have more to lose, but everybody has exposure, and anyone can be sued. So no matter the size of your exposure, it should be analyzed with your insurance broker.

How can having coverage with multiple agents negatively impact umbrella coverage?

We talk to business leaders all the time about their business insurance, but when you ask about their personal insurance, they are often unclear. Their spouse often takes care of that, and they are so busy protecting their business that they often can’t tell you where their personal insurance is, or what liability limits they carry.

For example, if someone has a home in Florida, that is a very tough market in which to get liability insurance, and if you can get it, the limits are sometimes very low. Now that person has different limits in two states through two agents, and if he or she has umbrella coverage, it doesn’t extend over all of those assets because the primary agent doesn’t even realize there is a policy with other agents.

The same holds true if someone buys a boat and gets coverage through the dealer but doesn’t tell the primary agent. It’s important to talk to your agent about all of your coverage to ensure that there aren’t any holes.

How often should you review your coverage?

It’s always good to regularly have that conversation and look at your policies because it might alert your agent to a gap in coverage. I always tell clients, ‘If you’re going to do anything different, call me. Don’t do anything until you call me.’ A good example is that what an insured calls a hobby may be a business by insurance definition.

That said, a lot of people are price shopping these days. That can lower your costs, but that’s not necessarily a good thing. Sometimes it’s better to pay a little more if you are with the right company with the right coverage. If you have great claims service, it may not be not worth moving to save $100.

What other areas of liability should people be aware of?

Another area is loss assessment. For example, if you are a member of a homeowner’s association and a claim occurs in a common area, each owner could be assessed for a portion of that loss. Depending on how many people there are and the size of the loss, your cost could be sizable.

In addition, if you employ an individual who is not employed through an agency, there is a good chance that you may be responsible for purchasing workers’ compensation coverage. In Ohio, if you pay someone more than $160 per quarter, say, to clean your house or mow your lawn, then you are responsible for contacting the workers’ compensation bureau and taking out workers’ compensation insurance on that person.

Although your insurance agent can’t sell you this insurance directly, consulting with that person can help you determine if this is a coverage you need to purchase.

Christine Kleintop is a personal lines producer at SeibertKeck. Reach her at

When choosing an investment adviser, many people are quick to hand over their money without asking questions. But failing to ask the right questions can lead to choosing an adviser whose philosophy doesn’t match yours and could cost you money, says Patrick Griffin, senior vice president, Lorain National Bank.

“Too often, the first question people ask an adviser is, ‘What should I buy?’” says Griffin. “What you should be asking is, ‘Who am I doing business with?’ This is the person to whom you are turning over your life savings. You have to ask the right questions to find the best person who fits your comfort level.”

Smart Business spoke with Griffin about the six Ps — profile, philosophy, people, process, performance and price — that can help you identify the right adviser for your needs.

When interviewing a prospective adviser, where do you start?

Start with the profile of the organization with which you are potentially going to do business. How much in assets is it responsible for? How many locations does it have? How many clients does the adviser have, and what other resources are available?

If you’re considering a jack of all trades, explore that person’s capabilities and the resources available for helping you with your portfolio. Also ask how many people are employed in the organization and what their roles are.

Finally, the single biggest question is how will your account be impacted if the person you are working with leaves the company? With a smaller organization, if that person leaves, all of that expertise goes out the door. A larger organization might offer greater continuity.

What does an investor need to know about a potential adviser’s philosophy?

This is the single most important thing investors fail to explore. Or if they do ask, the investment person responds, ‘My philosophy is to make you money.’ However, that’s a goal, not a philosophy. The bigger question is how are you going to make me money? Are you going to take risky positions and jeopardize my money? Are you gong to be ultraconservative and never meet my goals? Advisers should be able to clearly articulate their investment philosophy and how they operate their business.

It’s essential to find an adviser whose philosophy matches yours. If you are risk averse, an adviser who purchases gold is not a good fit. If you’re conservative, find a conservative adviser. If you like speculation, you need an ultra-aggressive investment firm.

What questions should an investor ask about people?

Ask about experience, education, professional designations and licenses. Then ask about structure. How are people’s responsibilities and efforts segregated? Is the person a jack of all trades, or is there a division of labor among selling, investing, researching and administration? Also, ask who you will be dealing with once the account is opened. Will it be the person who opened the account or someone else? How many other clients are they responsible for? If it’s hundreds, are you going to get the attention you need?

What is the next step?

The next step is process. Where is your money going to be invested? What is the process? Too often, advisers simply say you should buy X. But how do they know that if they don’t know what you need?

The first thing a professional should do is a needs assessment. Before recommending anything, that person needs to determine your requirements for liquidity, how much you have on hand, your time horizon, your tax situation and your expectations.

Next is an assessment of risk tolerance. What is your appetite for risk? Are you comfortable if your portfolio fluctuates? Are there any constraints on your investments? What will the asset allocation be? What are you going to invest in, and how much? How often will that allocation be rebalanced? Is the adviser going to buy the portfolio and forget it, or will your account be rebalanced so the original allocation remains consistent?

Finally, ask about the decision-making process. There are thousands of companies and mutual funds, so how will the adviser decide what to buy for your portfolio? And what are the criteria for selling?

What does an investor need to know about performance?

Look at the performance over time of the person managing your money and of the investments because, otherwise, you may be building on short-term anomalies that could send you in the wrong direction.

Second, how is performance communicated? By law, the adviser must send statements, but too many companies rely on that alone. Does the adviser meet with you about performance, or do you have to decipher the statement on your own? Will you receive additional information, such as how your portfolio has performed relative to the indices? If you lost 5 percent, but the market is down 20 percent, your adviser has done a good job of protecting your money.

How important is price?

The first thing people ask is what an adviser charges. Everyone gets paid, so if someone says there is no charge, it should be a red flag.

There are three ways to pay. With transactional fees, you pay every time you buy or sell. With asset-based fees, money managers charge a percentage of the value of the account. With advisory fees, the adviser gets a flat fee for advice but doesn’t do the actual investing.

Also ask about fees that you won’t see that may impact your account, such as withdrawal and redemption fees, fund expenses and bond commissions.

If you are handing over your life savings, you have to overcome the awkwardness of asking questions, because you won’t know something is wrong if you don’t ask.

Patrick Griffin is senior vice president at Lorain National Bank. Reach him at (440) 244-7119 or

Most business owners have a CPA and call that person to do their taxes, but don’t realize that their accountant can help them year-round. But working with your CPA at other critical junctures can ensure that your practices meet the IRS code and save you money in the long run, says David McClain, CPA, MBA, a manager in tax at SS&G.

“Many business owners want to get their tax returns filed and get it out of their minds for another year,” says McClain. “But there are a lot of options out there and a lot of ways that working with your CPA throughout the course of the year can save you money in the long run.”

Smart Business spoke with McClain about how creating an ongoing relationship with your accountant can benefit your business year-round.

How can a CPA assist a business in the implementation of employee benefits?

Employee benefits can be anything from tuition reimbursement to travel reimbursement, and it is very important to talk to a CPA about those programs before you implement them.

There are a lot of IRS rules surrounding employee benefits programs, and there may be some unintended tax consequences to your business if you don’t follow them.

Under IRS rules, there is often a maximum amount that is allowed to be reimbursed tax free to employees and certain rules under which a business can reimburse employees tax free.

If you set up your program without talking to a CPA, you may end up with a plan in which reimbursement becomes additional compensation, and therefore a taxable event to the employee. The result is that the employees will not get back the dollars that they initially thought they would.

A CPA can help you make sure that you are operating within the IRS code and that you are not unintentionally abusing the system.

How can a CPA impact a business’s banking relationships?

CPAs generally have relationships with several bankers, and they may be able to help negotiate better rates and terms with bankers they know, versus ones that you may be considering.

The other issue your CPA can help you with is understanding loan covenants and the potential audit requirements for loans.

When getting a loan from a bank, you may be required to meet certain covenants. A CPA can advise on whether it’s realistic to meet those covenants or whether you need to renegotiate.

The accountant may also be able to negotiate a requirement for a full-blown financial statement audit to a simpler financial statement and review, which is less work and costs the client less but gives the bank the reassurance it needs to offer that loan.

How can a CPA provide a benefit in the case of an IRS audit?

Any time you are facing an IRS audit, the No. 1 rule is never go into it alone. As soon as you get a notice saying that you’ve been selected for an audit, your first phone call should be to your CPA. That is important because when the CPA looks over the IRS audit request lists and talks to the agent for the first time, he or she is probably going to have a good understanding of exactly what the auditor is looking for.

The accountant is going to be able to navigate you though the audit rules and give the IRS the information it is looking for. If you can get the IRS the requested information and support the positions you’ve taken, you often get a ‘no change’ on the audit.

But if that doesn’t happen, you need a CPA to be there if it gets down to negotiations with the IRS or ends up in tax court. When dealing with the IRS, your CPA should always be your first stop.

Should a business owner wait until tax season to consult with a CPA on general business matters?

No. Too many business owners do that, and that is a mistake.

You really need to talk to your accountant in November or December. That’s a very important time. Even if you don’t think there is anything going on, that is the perfect time to sit down with your CPA and look at where you are for the year, what your business has done for the year and where you are in terms of income versus where you were last year.

Look at whether you need to adjust making estimated payments for the year and whether you are going to be covered on tax payments come April 15. This will give you an idea of what you owe so that you can plan your cash flow better.

You may be able to implement some ideas before the end of the year to save money.

Taxes are one of those tasks in life that people don’t want to deal with. They want to get their return filed and get it out of their minds for the year. But there are a lot of options out there, and calling your CPA when making business decisions can help you save money in the long run.

David McClain, CPA, MBA, is a manager in tax at SS&G. Reach him at (800) 869-1835 or

After six successful years in Austin, Greenling is expanding to the Dallas/Fort Worth Metroplex, choosing Allen, Texas, as the hub of its activities.

Greenling, which home-delivers local food, organic produce and groceries, last year delivered 20,369 local boxes — about 142,583 pounds worth of food — in Central Texas. It also delivered another 20,000 pounds sold individually on the site, says Mason Arnold, founder of Greenling.

“Greenling was founded squarely around sustainability,” says Arnold. “We do local and sustainably produced or certified organic food and home delivery of groceries. Anything we can get local, we do; otherwise, we get it from certified organic farms. From that, we’ve created a new distribution model for local food that gets it from farm to table fresher and faster than anyone else can.”

Smart Business spoke with Arnold about how his business is changing the way people eat and why he chose Allen as a base for his Dallas/Fort Worth operations.

What inspired your business?

I graduated from the University of Texas with a chemical engineering degree and went to work at an environmental consulting firm. I was seeing firsthand what was happening to the environment, and it made me sick. As I learned more, I became more passionate about needing to do something to help the environment. I started an environmentally responsible landscaping business and, as I grew that and learned more about sustainability, I felt I wasn’t really being a change agent.

I felt like the biggest challenges were water, energy and food, and food was at the center of everything; it uses more potable water than all other human consumption combined and more fossil fuel than anything other than our cars. I thought that if we can fix the food system, so many other things will take care of themselves.

So I got together with some college friends and started researching the food system. Once we saw how broken it was, we decided to try to find a better way to get food around and founded Greenling. But there were a lot of expensive lessons early on about how to move food around.

Produce in Texas is somewhat limited, but we have yet to have any problems fulfilling orders. However, we’re working hard to help grow the system and farmers are very much interested and willing to ramp up their production because they know the demand is there and that we’re helping them to bridge that gap.

Why did you choose Allen when you decided to expand to the Dallas/Fort Worth area?

Our model is locally focused, and we can serve up to a 100-mile radius. So when we were looking to expand here, we chose Allen because of what the city of Allen is trying to do as a local food hub and because we can serve the entire Dallas/Fort Worth metroplex from this location.

When we decided coming to Dallas, we started talking with different chambers of commerce in the area. I knew some people who had already been working with the city and who told me how much Allen wanted to do with local food. The city had already bought a plot of land that they’re turning into an educational farm.

I spoke with a city councilman who told me Allen wanted to be the center of local food for the Dallas/Fort Worth metroplex. We told them that if they wanted to be the center that they really needed a company that does distribution, because a company like Greenling spurs a lot of activity around us. Producers want to locate near us because it makes it easier and more convenient for them to distribute their product.

We also had some conversations with the Allen Economic Development Corporation about what Greenling does to build local food systems, and they got excited and said they really wanted to support us and wanted us to help them develop Allen as a local food hub.

How did the Allen Economic Development Corporation facilitate your expansion to Allen?

They really helped us on several different fronts. They introduced us around and helped us understand the different community sectors in this area. They also provided economic incentives to help us build a local food hub in Allen and create a warehouse where the food will go and where the baskets of produce and food will be assembled.

But we’re also going to create 100 jobs in the next two to four years, with warehouse workers and drivers, and administrative and support staff, so that was exciting for them, as well. We are also investing in almost $1 million of infrastructure in Allen, from which we can serve the entire Dallas/Fort Worth area.

Do you have plans to expand to other areas?

We think this model plays an important role in helping build local food systems and think that, economically, it can thrive in any community with a quarter million people or more. As a result, we fully intend to replicate this model as many times as we can across the U.S.

The other benefit to communities in which we locate is that, as we have grown, we’ve learned that we end up being the No. 1 preferred sales channel from our farmers because we provide consistent demand, we’re not beholden to weather as they are with farmers markets, we place large orders, we are one stop for them, and we are super flexible with receiving, whereas with grocery stores, you have to deliver in a certain window, which is usually the best time for farming.

As a result, we end up getting the highest quality products and the best prices, and we’re still able to give farmers a fair price because we’re working directly with the consumers. Local farmers end up really loving us, and we love that we can help them in that way.

Mason Arnold is founder of Greenling. Reach him at (512) 440-8449 or visit Reach the Allen Economic Development Corporation at (972) 727-0250 or

Insights Economic Development is brought to you by the Allen Economic Development Corporation, strategically positioned in the Dallas/Fort Worth metro.

Finding a new location for your business isn’t as simple as picking out a nice building and moving in. There are many factors that go into the decision, and working with a professional can help ensure that you take advantage of all that a location has to offer, says Rick Hughes, executive director, Cushman & Wakefield of Texas Inc., who recently worked with Allen Economic Development Corp. to locate one of his clients to Allen, Texas.

“A commercial real estate professional is very valuable in locating the right place to operate your business,” says Hughes. “The demographics of an area, where employees are located, logistics, right to work issues, workers’ compensation obligations, unemployment insurance costs and other issues all come into play. It is significantly more complicated than saying, ‘This city looks like a nice place to run a business.’”

Smart Business spoke with Hughes about how to find the right location for your business, and why Allen may be a great choice.

What are the benefits of being located in Allen?

In the Dallas area, professional and college-educated populations are generally north of downtown, with cities that have good school systems and that are very attractive places to be and to raise a family.  Good schools, good fire and police support, and cost effective living are some of the attributes that make Allen attractive.

The city also has a number of corporate headquarters, which businesses can potentially use to their advantage.

What should a business owner look at when trying to determine a new location?

One important thing is the availability of certain kinds of labor. What is the profile of labor? What kinds of businesses do well in that area? Where are those people working? Where do they live? Look at the demographics and determine whether the available labor pool will meet your needs.

What else should a business consider?

If you are a manufacturer, for example, and are making something that needs to be distributed efficiently, you don’t want to be in a congested area. But you do want to be close to the Interstate highway system, so there are logistics to consider.

Also look at where ‘the Boss’ lives. A company will always say that is not a factor, but invariably, the chosen location is closer to his or her home than to those of other employees, so consider where the management team lives or wants to live.

The quality of schools is also a factor. A business wants its employees to live close to work, and schools are a part of that. If an employee has to leave work to go to the school, you don’t want them to have to drive an hour each way.

Some businesses are also sensitive to the company’s address. They want a corporate address, and they want it to be in a particular city. But for the most part, the labor profile, the location of the management team and what kind of building the company wants to be in are key.

How can an outside adviser help a business make the right choice and take advantage of available incentives?

The adviser can act as an insulator in negotiations. If a company is acting on its own and meets with a city, and the city offers it $500,000 to move there, that may sound like a good offer. But if you have that go-between, he or she can bring the offer back and the company doesn’t have to respond on the spot.

An experienced adviser can also tell you how each potential city is going to respond to each opportunity. That person knows which cities are looking for high-paying jobs, and which are not as interested in the quality of jobs as they are the number of jobs. Some are more interested in the capital and infrastructure commitment a company is going to make. For example, the city of Allen in very keen on having corporate headquarters move to the city, and an adviser will know that and can help you leverage that.

How can an economic development corporation assist a company in determining where to move?

A company and its adviser can send out a profile. “Here is the capital investment that we are prepared to spend if we move to your city. Here are the number of employees and jobs that we are going to bring to your city. Here are the wages and benefits of these jobs, aggregated.” Then ask what the economic development corporation can do to help mitigate your costs. For example, it might say, ‘If you move here, we will offer property tax abatement on your real and personal property, or we will give you a grant of $500,000, paid out over two years, if you commit to move.’

After you’ve looked at the proposals, then look at available real estate to see if there is a building in that city that works for this company. Look at the incentives and determine if they help mitigate the costs of moving. Look at the demographics to see if it is a place where not only do your employees live, or would want to live, but at whether the profile demographic contains the kinds of people you will want to hire.

What is the state of incentives, given today’s economy?

In some instances, states are taking economic incentive funds and moving them into budgetary items. Other states, such as Texas, understand that, long term, in these economic times, when there is huge budgetary pressure at the state level, that states need jobs more than ever. They are investing in jobs, as opposed to taking money away from attracting and recruiting jobs, and adding money to economic development. Those are the states that businesses are going to want be in because they are investing in the future.

States that aren’t doing so are being very short-sighted by reducing the funds they have in their tool chest to attract businesses.

Rick Hughes is executive director at Cushman & Wakefield of Texas Inc. Reach him at (972) 663-9601 or

Insights Economic Development is brought to you by the Allen Economic Development Corporation, strategically positioned in the Dallas/Fort Worth metro.