Steve Trusty

Wednesday, 28 February 2007 19:00

Experience with VoIP

Communications are important for any business. When you need communications to not only receive orders from customers and place orders with vendors but also to host a radio call-in show, you need a system that provides mobility, serviceability and dependability. Tying into your computer system and saving money are added benefits.

Dr. Len Brancewicz, owner of The Medicine Shoppe in Rochester, Pa., and co-host of nationally syndicated “Ask the Pharmacist” radio show, depends on his telephone.

“In my business, if I lose the ability to communicate, I’m done,” Brancewicz says. “With several business segments to run and calls needing to be returned all over the country, I need a communications system that is first dependable and second cost-effective. A VoIP system was just what we needed.”

Smart Business talked with Brancewicz for more insight on how and why he chose this system and what it has done for him.

What exactly are your business and communications needs?

Besides owning and operating The Medicine Shoppe in Rochester and The Nutrition Shoppe in Wexford, I am a partner in Medicine Shoppes in Oakmont and Penn Hills. I also co-host the ‘Ask the Pharmacist’ radio program live five days a week in the Pittsburgh area and at various times throughout the country on numerous radio stations and satellite radio through syndication.

In the pharmacy world, we have to be very efficient in processing all the different layers of insurance. To compete with the grocery stores and other chains, we need to fill prescriptions the quickest way possible, communicating with multiple doctors, insurance companies and vendors. All of the updates in computerization over the past several years and the advent of DSL paved the way. Our business also requires frequent one-onone conversations as patients and callers have questions that can only be answered by individual conversations by telephone.

We needed a system that allowed us to receive numerous calls at all times of the day and night and be able to route them in an efficient manner for both the customer and us.

What was the primary trigger that got you looking at VoIP?

We were notified last summer that the Rochester shopping center that includes our store would no longer have the phone and Internet service that we had been using and that we would have to change providers. I had known John Curry at Curry IP for some time and asked him to do an analysis of our whole communications and computer system.

The first thing we did was put in two DSL lines from two separate companies. We then set up things so that if the line with phone system goes down, it is automatically switched to the other line with the computer system. The same thing happens with the line to the computer system. It would automatically switch to the other line.

The next thing we needed was an economical phone system that provided virtually unlimited calls. We have to return calls all over the U.S., and regular long-distance charges would have been very costly.

The next step was to reanalyze the whole system. We started with just the one store and the radio show. Now that we have had some experience, we have a much better handle on what can be accomplished and how we can make communications between locations more cost-effective. One area we are discussing is combining purchasing by networking the stores. Not only would there be cost savings, but we could track inventories more efficiently.

What kind of cost savings have you realized?

Our previous communications, local and long-distance phone service and Internet connections were running between $820 and $860 per month. We have doubled our service. Last month was our first full month, and the bill was $349. Yes, we have the hardware and DSL lines to pay for, but we are getting more done at less cost per month, so it won’t take long to make up the initial costs.

Do you have any suggestions for those considering VoIP?

Choose a vendor that is easily accessible and is willing to really try and understand your business and its needs. Be flexible and willing to update as new processes are evident. If no downtime is a critical factor, make sure you have failsafe systems and someone to contact quickly if problems occur. Plan not only for immediate needs, but also look at how you might grow and how a properly designed system can help.

LEN BRANCEWICZ is a Pittsburgh-area entrepreneur. Reach him at (724) 728-7455 or though the Web site Reach John Curry, owner of Curry IP Solutions (, at (412) 307-3600, ext. 9007 or

Wednesday, 28 February 2007 19:00

SOX’s hidden benefits

Stock options have received a lot of bad press recently, especially back-dated stock options. If options were granted strictly as an incentive to increase performance by management, that would be one thing. Unfortunately, many times these benefits to management can come at the expense of the shareholders.

“My latest study shows that some managers have reduced earnings to miss important earnings targets in order to lower stock prices,” says Dr. Mary Lea McAnally, associate professor of accounting for Mays Business School at Texas A&M University. “What this does is make their option grants more valuable, but at the expense of shareholders. This earnings management is in addition to the backdating problems that we already know about.”

Smart Business discussed these findings with McAnally for further insight into how stock prices are affected.

How can granting stock options affect share prices and the shareholders?

Conventional wisdom is that managers do everything they can to increase earnings so that stock prices rise, their reputation is enhanced, their bonuses increase and the options they hold are more valuable.

But what is less obvious is the possibility that new stock option grants might entice managers to decrease earnings or even to miss earnings forecasts. The usual reaction to missed targets is a reduction of stock value, which lowers the strike price on new option grants. This is worse than backdating in some ways, because with backdating the managers just take advantage of stock price drops. What my study shows is that, in some cases, managers cause the stock price to drop.

What can be done to prevent or at least bring these actions into the open?

A company’s board of directors is its first line of defense. Boards need to be vigilant for earnings management or manipulation and, at a minimum, need to get answers when companies miss earnings targets.

While there have been some complaints about the cost and other negatives of Sarbanes-Oxley (SOX), one great benefit is the quicker and more complete disclosure of option grants. Section 403 requires registrants to report new stock option grants to the SEC within two business days. If a company reports bad news, like a missed earnings target, and then files a Section 403 report saying more stock options have been granted to key employees, that transaction is going to be noticed.

Another benefit of SOX is the requirement that audit committees have more financially literate members. These members can take a hard look at the timing of option grants, especially when earnings are disappointing.

Are there other benefits of SOX in these situations?

In general, I believe that the benefits of SOX have been misunderstood and perhaps undervalued relative to all the costs of complying with the new rules. For example, with audit committees having more financially savvy members, firms are making better financial decisions across the board, like better hedging choices and better financing decisions. Those benefits are hard to quantify, but at least one recent study finds that the stock market assigns a premium to companies with more literate members on the board and audit committee.

Some recent corporate implosions may have been exacerbated by weak boards with less oversight, and things just spiraled out of control. Before SOX, there weren’t always the proper controls that would enable or empower managers who wanted to do the right thing.

In the aftermath of the Enron and WorldCom meltdowns, accountants did take a lot of flak. One of the silver bullets of SOX is that accounting standard-setting and oversight have come under more scrutiny. Accountants have to be more on their toes and do a better job, and SOX gives them more authority. Auditors have to be more independent. And that’s a good thing because when push comes to shove with a client, auditors can point to SOX and use that as a stick. SOX is making auditors’ jobs somewhat easier and creating a bit of a boom time for the accounting profession.

What should a business do about stock options from this point forward?

Stock-based compensation is a good tool to motivate managers and get their incentives perfectly aligned with those of their shareholders. It would be a shame if companies stopped using options or restricted stock because of negative market perceptions created by the recent scandals. But the hope is that the actions by the SEC and states attorneys general will be a clarion call. There’s no substitute for well-written policies, board oversight and financial reporting transparency.

DR. MARY LEA MCANALLY is an associate professor of accounting and research fellow at Texas A&M University’s Mays Business School. Reach her at

Wednesday, 31 January 2007 19:00

The great equalizer

How does a company with 20 to 200 employees compete with companies two, three or 10 times their size? How can they maintain their efficiencies, increase productivity and lower costs at the same time? That may seem like a pretty tall order.

“With Voice over Internet Protocol (VoIP) phone systems, all that is possible along with the added benefit of disaster recovery,” says Jonathan Curry, vice president of sales and marketing for Curry IP Solutions. “You can obtain unlimited long distance service, increased mobility, innovative long-term solutions, and single network infrastructure savings and give the appearance and service of a much larger company. VoIP is the great equalizer between small and large businesses.”

Smart Business talked with Curry about the basics of setting up a VoIP telephone system.

Why do you say VoIP is the great equalizer?

You can set up a virtual office with your employees. They can work from anywhere and be connected through the Internet to your main office. They can be reached by telephone and have access to any needed data. When a customer calls your central number and provides the extension to an operator or by key pad, the call is transferred to the right person no matter where he or she is located; home, branch office or wherever. You can add employees without the expense of more office space and equipment. They can set up in their home, but customers and suppliers can be taken care of seamlessly without having to know where the employee is located.

Where do the savings come in?

One area is long distance service. Some plans offer unlimited long distance service while international calling is down to pennies per minute to a number of countries. Call centers can also drill down their costs by eliminating dedicated PRIs or point-to-point T-1s. Another area is bill simplicity. Your bill is provided electronically without stacks of paper stored in file cabinets. Invoices are easily imported into Excel for analysis whenever needed. You can set up monthly payments to be charged directly to a credit card or for an electronic fund transfer. So you have no missed payments or late fees.

You can save time when calling colleagues. Instead of having to punch in 10 digits, you can just dial their four-digit extension number, just like you would in the office, and be connected directly to them.

Another time saver is the ability to check e-mail and voicemail messages at the same time. Forwarding a voicemail message to someone else is as easy as forwarding an e-mail.

Saving capital expenses is also a benefit. With traditional phone systems, the hardware may be outdated soon after it is installed. With VoIP products, one vendor often updates its software or firmware for free. With a point and click of your mouse, you’re instantly updated.

You can grow your system as it fits your budget and you will be operating in the most up-to-date way. Some service providers provide hosted PBX. With this service, companies only need to purchase IP phones and not a complete system, realizing a significant reduction in capital expenses.

How would this system assist in disaster recovery?

The ability to have employees work from anywhere also works in case of emergencies and natural or man-made disasters. You set up your disaster recovery plan to include who is responsible for what. With a couple of clicks of the mouse, your computer system can be reset to operate from a remote location. All calls can be rerouted through that location, and employees can converse with each other, customers and suppliers.

Are there any potential downsides?

The latest concern was the routing of emergency calls. You should check with your service provider to verify that it is E911-compliant. If it is, anytime you change your location you must update the physical address on the provided Web site. Then, if a call is placed to 911, the call center will have both your contact number and your current location. While your provider may place a follow-up call to your Pittsburgh telephone number when you are out-of-state, it will respond with emergency personnel and equipment to the physical address you updated in the Web site.

A second concern may be quality. With the explosion of access to increased bandwidth and hardware, it is difficult to know if it’s VoIP or traditional phone service.

JONATHAN CURRY is vice president of sales and marketing for Curry IP Solutions (, which caters to business clients. Reach him at or (412) 307-3600, ext. 9002.

Sunday, 31 December 2006 19:00

Managing diseases

As health care costs and health insurance rates continue to rise, it is imperative to find ways to use your dollars most effectively and efficiently. Promoting a healthy lifestyle is one way to create a more productive work staff. Encouraging regular checkups is another way to keep costs down. When most diseases are detected in their earliest stages they are easier to control and companies retain healthier employees for a longer period of time with less expenditure for treatments.

Early detection, diagnosis, treatment and eventual cure for lung cancer should be at the top of the list for awareness.

“Lung cancer will kill more people this year than breast cancer, prostate cancer, colon cancer, liver cancer, kidney cancer and melanoma combined,” says Laurie Fenton, president and CEO of the Lung Cancer Alliance. The disease will kill 160,000 people this year. More than 70 percent are diagnosed at late stages and most will die within months. That is about to change. As reported by the New England Journal of Medicine on Oct. 26, 2006, “a 13-year landmark study found that with CT screening, lung cancer can be detected at the earliest stage (Stage I) in 85 percent of patients and the estimated 10-year survival rate goes to 92 percent for those whose detected cancers are removed immediately.”

“We need to do all we can to get more people, especially at-risk individuals, tested much earlier,” says Fenton.

Smart Business asked Fenton for more thoughts on reducing health care costs and increasing employee productivity.

What can employers do to help with disease management?

Anything that can be done to encourage a healthy lifestyle is going to create a more productive staff. While smoking isn’t the only cause of lung cancer, providing ways to help employees quit will cut health care costs in the long run.

Also, review your insurance coverage. Is CT screening for lung cancer covered? Many policies cover mammograms, PAP smears, colonoscopies and other diagnostic tests that can run into the thousands of dollars. CT chest scans have now dropped below $200 retail, a small price compared with the hundreds of thousands of dollars involved in treating end-stage lung cancer. Offering employees a baseline scan is an added insurance policy for them — as well as the company — that if they are going to have lung cancer (a notoriously slow developing cancer) it will be found at the earliest, most treatable and least costly stage.

Information is key. Let employees know the facts about lung cancer and what you are providing to encourage early detection. Consider including provisions for informing the general public about what can be done to fight disease in your giving back to the community plans.

Isn’t it enough to just discourage smoking by employees and the public?

That is a start but, after smoking, the lungs never go back to normal. Also, smoking is not the only cause of lung cancer. While 35 percent to 40 percent of new lung cancer cases are current smokers, 50 percent are former smokers and 10 percent to 15 percent have never smoked.

Other at-risk individuals include those exposed to second-hand smoke, to radon or asbestos, have a family history of lung cancer, have served in the military or have been diagnosed with other respiratory diseases such as emphysema, COPD (chronic obstructive pulmonary diseases) or tuberculosis.

Is there anything else that companies can do to fight lung cancer?

More research into diagnosis and treatment is vitally important. The underfunding of lung cancer research, the stigma of smoking which has tarred all patients whether they smoked or not, and the perception that it is a self-inflicted disease ‘unworthy’ of public funding has had tragic consequences.

The billions poured into research and early detection in, for example, breast and prostate cancers, has led to five-year survival rates of 88 percent and 99 percent, respectively. In glaring contrast, the five-year survival rate for lung cancer is still only 15 percent. Mammograms and PSA tests are generally covered benefits and widely promoted. Yet how many women know that lung cancer will kill twice as many of them as breast cancer? How many men even realize that they are three times as likely to die of lung cancer as prostate cancer?

People with lung cancer deserve the same compassion and support as people with any other cancer. We have to get beyond the stigma of tobacco and concentrate on detection, diagnosis, treatment and cure. Public-public partnerships will be crucial to achieving these goals. Until we have cures, our best weapon today is early detection through CT screening, and companies can play a crucial role in making this happen.

LAURIE FENTON is president and CEO of the Lung Cancer Alliance. For more information go to: and

Sunday, 31 December 2006 19:00

Interest rates vs. profitability

Every time the Federal Reserve gets together to discuss rates, business people take notice to see what the Fed is going to do. Its role is to control monetary policy to “promote maximum employment, stable prices and moderate long-term interest rates.” It primarily meets its objective by setting a target federal funds rate (the rate that the Fed charges depository institutions to borrow money to meet their overnight reserve requirements). To control inflation, the rates are tightened (or raised) to slow down the economy and loosened (or lowered) to speed it up.

“As the Fed lowers or raises the federal funds rate, banks need to adjust the rates that they charge their customers when they lend funds or pay their customers on deposits,” says Patti McKee, executive vice president and chief financial officer at ViewPoint Bank in Plano. “The rates charged and the rates paid can certainly have an affect on the profitability of a business.”

Smart Business asked McKee for more insight on ways businesses can use information on rates to positively affect their profitability.

Why is it important to keep an eye on the Fed rates?

Most business loans are set to a spread to the prime rate. In other words, if it goes up, borrowing costs are going to move up. If it goes down, borrowing costs go down. If the business has an adjustable-rate loan, the rates will go up or down according to the terms of the loan.

Most overnight investment-type accounts (money market and sweep accounts) for liquidity are based on Fed funds. So, as the Fed rates are increased or decreased, the amount of money that can be earned on overnight deposits will be affected.

How can a business person use this information to affect profitability?

First of all, keep in mind that loans can be obtained with rates that are either fixed or variable and tied to an index. Fixed-rate loans set the interest rate for the term of the loan. Interest rates on variable-rate loans can change as soon as the Fed rates are announced or according to schedule. They may change every 30 days, 60 days, quarter, or whatever else is stated in the terms.

To avoid paying more on your loans than what you earn on your investments, you must put into place a good investment strategy while maintaining enough liquidity to meet operations. One common method is laddering terms and rates so that not all of your investment money is re-priced as rates move.

Variable loans are usually tied to an index, either prime or the U.S. Treasury curve. As the rates move, so does your cost of loans. The best practice is to match your earning assets to your cost of liabilities so that as rates change, the impact to your profitability is negated.

What is the yield curve and how does this affect me?

The yield curve is a plotting of yields that U.S. Treasury bonds pay from three months to 30 years. This is a good tool to get the overall movement of interest rates. It measures what you can get or pay for short-term money compared to long-term money.

In a normal yield curve, you should get rewarded for placing your money in a longer term compared to shorter term. However, the yield curve today is inverted. This means that interest rates for shorter terms are higher or equal to those with longer terms.

Why might you invest longer when you can get paid more for a shorter term?

An inverted yield curve is generally a sign of lower interest rates in the future. While you may think you are sitting pretty with a high-yielding six-month certificate, in six months when the certificate matures, the rates could have moved down significantly and you will have money to invest in a much lower-interest-rate market compared to what you would have if you would have locked into a longer term.

The best strategy is to look at your cash needs and try to match the terms of your investments to those of your liabilities. Also, keep your banker informed of your needs and work with him or her to best plan your strategy.

PATTI MCKEE, CPA, is executive vice president and chief financial officer of ViewPoint Bank in Plano. Reach her at (972) 578-5000.

Friday, 24 November 2006 19:00

Family medical leave

Are you covered by and doing everything you should to follow the requirements of the Family and Medical Leave Act (FMLA)?

Since FMLA became effective on Aug. 5, 1993, there have been numerous clarifications including court rulings and Department of Labor opinion letters that may affect how well you are following the letter of the law. There may be some things that you have erroneously thought you couldn’t do under FMLA. Employers who have 50 or more employees during 20 or more calendar work weeks in a calendar year.

“There have been many court cases on the FMLA since its enactment, and it is so important that companies comply according to the way these cases have interpreted the statute and regulations,” says Donna Geary, an employment law attorney with Jackson Lewis LLP. “Your best assurance of that compliance is regular contact with your attorney who specializes in employment law and specifically in the FMLA.”

Smart Business talked with Geary about some specific areas that companies should realize when dealing with FMLA.

What are the basics that all companies should be aware of with FMLA?

  1. Employers should have an FMLA policy and forms that have been reviewed for legal compliance. Any printed handbook or benefits pamphlet must contain FMLA policies and procedures. If an employer does not have any printed materials of its own, it must provide the written FMLA fact sheet. It must also display the FMLA poster. Both of these are available on the Department of Labor (DOL) Web site,

  2. HR folks should be well aware of the law, and front-line managers should be trained on the basics to prevent missing or not recognizing an FMLA event.

  3. Employees who take FMLA leave must be given full details of their leave and it must be documented as such. The importance of this is emphasized by reviewing the Supreme Court case of Ragsdale v. Wolverine Worldwide, Inc.

  4. Some of the forms have been updated since the original enactment of FMLA. Make sure you are using the most current ones. Again, check the DOL Web site.

  5. Someone needs to keep an eye on state laws. There are now approximately 11 states with laws that provide more than the federal requirements. For example, the District of Columbia requirement covers any entity with 20 or more employees within D.C.

What are some things that employers may not be aware of that they can do?

  1. Always require that employees provide medical certification for their leave (see 29CFR, Part 825.305 and 825.306). While the FMLA doesn’t require that, how will you manage leave without documentation?

  2. Require recertification when permissible (29CFR, Part 825.308). Typically, recertification cannot be required more than every 30 days or cannot happen unless circumstances of the leave change. An example might be an employer learns information that could cast doubt on the validity of the medical certification.

  3. Require second and third opinions when appropriate (Part 825.307). If you have information to indicate that the doctor may be providing more leave than warranted, you can require an additional opinion. If that one contradicts the first, then a third can be required to make the final decision.

  4. Require paid leave be used concurrently with unpaid FMLA leave (Part 825.207). Workers’ compensation and certain other paid leaves can run concurrently with FMLA leave.

  5. An employer may transfer an employee to an ‘alternative position’ to better accommodate intermittent/reduced schedule leave (Part 825.204). You can do this as long as you provide the same benefits and same pay rate that accommodate the recurring periods of leave. The employer cannot use this to punish an employee.

  6. If both husband and wife are employed, they may be required to take their 12 weeks split between the two of them (Part 825.202). This applies to certain kinds of leave such as birth of a child or care of employee’s parents. Check with your attorney on this. It cannot be used for the employee’s own sick leave.

  7. An employer can require ‘return to work’ medical documentation or ‘fitness for duty certification’ (Part 825.310). This provides more control and documentation for the employer.

Can you think of anything else that companies should be aware of?

The HR Department must keep up-to-date on the latest forms, requirements and court rulings to protect the company, themselves and management. Under FMLA, not only can the employer be sued, but there is individual liability. Also, check every absence to see if it falls under FLMA.

DONNA GEARY is a senior lawyer (and partner, effective Jan. 1, 2007) with Jackson Lewis LLP. Her specialties are FMLA, ADA and FCRA. Reach her at or (412) 232-0154.

Friday, 24 November 2006 19:00

Reduce premiums, provide coverage

Health care costs continue to rise. According to the Kaiser Family Foundation (KFF) — a nonprofit organization that provides facts and analysis on major health care issues facing the nation — health care premiums have risen between 50 percent and 60 percent over the past five years. Comparatively, in this same period, inflation rose 15 percent to 16 percent and wages 16 percent to 18 percent. In fact, the average cost of health care insurance for a family of four is now $11,000 per year.

Yet there are methods to help curb the costs, according to Gary Stroud, Ph.D., program chair of the human resources management major at Franklin University.

“While health care premiums for your company may be above or below the average, there are a number of ways that you can reduce those premiums and still provide coverage for your employees,” Stroud says. “The good news is, these cutbacks will actually boost morale in the workplace and allow you to keep good employees.”

Smart Business talked to Stroud to gain more insight on what a company can do to keep health care premiums at manageable levels.

What concerns should a company address when reviewing health care costs?

It is essential to make certain that those in charge of human resources are fully trained for their function.

The HR staff needs to be aware of current laws, rules and regulations pertaining to employee benefits and to fully understand and apply them. They must stay current on federal and state laws and, in some cases, local laws and ordinances. As a company, your role is to provide this staff with the resources for adequate training or to hire a human resources manager who has the expertise and background to be abreast of the newest information. Training needs to be ongoing, as skills fall out of date, laws change, and rules and regulations are continually evolving.

To achieve optimum ongoing knowledge development, it is also important that all of your managers become involved in the respective associations and organizations that cater to their profession. For example, your key HR people should be actively involved in the Human Resource Association of Central Ohio and the Society of Human Resource Management, and managers should participate in the American Management Society. Those with benefits oversight should involve themselves in Worldatwork, a compensation and benefit organization.

What are some specific ways to reduce health care premiums?

Conduct an audit of what health care-related events have occurred in the past, determine what is needed by the majority of the employees, and set your priorities accordingly. Look at each area of coverage and provide substantial coverage for the catastrophic things that cannot be foreseen, and allocate responsibility to employees for the more common events that can be expected.

A good example is to avoid coverage of benefits for which everyone would be required to pay, but only a few will use, such as hospitalization. Why should your employees or the company pay a premium for overnight hospital stays when it is unlikely that the majority of your employees will need such a benefit? Talk with your agent about a policy that excludes coverage for the first one or two nights stay and then kicks in for the third and succeeding nights. Perhaps include a provision that if the hospital stay is more than seven nights, all nights would be covered.

Drug plans are another area that can be quite costly, yet with proper prioritization can meet the needs of most of your employees while at the same time cutting premium costs.

What about coverage that is mandated by law?

While you must comply with the mandates, you must also be aware of what areas are not mandated and how those can be used to cut costs. This is why it is vital that people reviewing benefits plans are current on all of the changing laws and regulations.

What else?

Communication is essential. Convey clearly to all employees what you are doing to meet coverage requirements and still keep costs down. Provide information on how employees can save for the future and establish incentives for them to plan ahead. Tactfully let them know that it cannot be expected of the company or government to supply all their personal needs.

Also, when recruiting members of the work force, be mindful of the job skills needed and hire only those with the appropriate qualifications. If you do not possess effective recruiting skills or don’t have the time to devote to this key area, consider either hiring a recruiting expert or company to provide this function.

GARY STROUD, Ph.D., is program chair of the human resources management major at Franklin University in Columbus. Reach him at or (614) 947-6165.

Wednesday, 25 October 2006 20:00

Weather-proofing your liability

Are you adequately covered with personal property insurance? Have there been changes in your life that might affect what you thought was adequate coverage? When was the last time you sought the assistance of an experienced insurance professional?

“Most affluent people are under-insured, under-serviced and are not properly protected,” says Mary Hammett, personal lines broker at Westland Insurance Brokers Inc. “You need a professional insurance broker to perform a risk analysis on a regular basis to quickly uncover the ‘goofs, gaps and inadequacies’ (or the GG&Is) in your current coverage.”

Smart Business asked Hammett for additional insight on determining your personal property insurance needs.

What are some common GG&Is?
Inadequate limits, no personal injury protection (libel, slander, wrongful eviction, etc.), not-for-profit board membership, workers’ compensation for domestic employees, and no coverage for ‘toys’ (jet skis, motorcycles, ATVs, boats, planes). Also, assets owned in trusts or LLCs that haven’t been listed. Homeowner’s policies without build-to-code coverage, no extended replacement cost, no coverage for sewers or drains that back up. Other areas include condos with no insurance, personal property that has ACV (actual cash value) instead of replacement cost. Valuable articles that have not been scheduled are another common gap. No personal umbrella or a liability limit too low to adequately protect a client’s net worth.

How do you determine who needs a personal umbrella?
Everyone should look into owning one. Your homeowners or auto policy limits most likely would not be adequate for a liability lawsuit involving a crippling injury or — even worse — death.

A personal umbrella policy will help defend you should a catastrophe occur. It will protect your assets and maintain your lifestyle. A personal umbrella provides protection against many unusual claims and beyond your usual limits, all for a surprisingly low premium.

Another option to look into is a group excess policy. These are especially helpful for high-net-worth executives, partners and professionals of corporations or organizations who have substantial personal liability exposure. In our litigious society, these individuals are among the most alluring targets for lawsuits. The group excess policy works similar to group health in that it allows some who otherwise may not qualify become eligible, at costs of up to 50 percent less than regular stand-alone policies. Many businesses are providing these group excess policies as an added benefit to retain their most valuable employees.

Why do you think these inadequacies occur?
One major reason is a lack of communication. Having policies with multiple agencies often leads to goofs and gaps, because one agent doesn’t have the whole picture.

Another reason is that life events — such as an inheritance, selling a business or other sudden money occurrences — can happen. The individual might purchase homes or other assets with this new-found cash. Without a lender requiring insurance, the person ‘forgets’ to contact his agent. Even if he or she can afford to go without property coverage, the liability exposure it creates isn’t good risk management. People also upgrade or add onto their homes and don’t think to inform their agent.

How can these inadequacies be remedied?
Work with a broker who has partnered with multiple A-rated carriers. Because such a broker has the markets to cover your most precious possessions, you can save time and money by consolidating all of your personal insurance. Talk to your broker about confidential risk analysis, which will identify your assets and exposures. Ask your broker to create a customized package to fit your specific needs.

It’s also good to follow up with an annual review to ensure that your agent continues to have the most current, up-to-date data on all your personal insurance needs.

Do you have any other recommendations?
When remodeling and/or adding square footage or decks, porches or garages, the insurance coverage must be increased. You should always call before the work begins. Depending on the size or nature of the construction, a change in policy type may be required.

Ask your broker to do a computer workup that will evaluate the cost of demolition, debris removal and the rebuild to your property.

For homes valued above $750,000, your agent may provide a more professional evaluation once the coverage has been placed. The insurance carrier may send a trained appraiser to photo, measure and calculate the cost to rebuild your home. The appraiser documents the unique features of your home so that they can be recreated. This is to ensure your home can be completely replaced should a loss occur. All of those services should be included with no additional fees.

MARY HAMMETT is a personal lines broker celebrating 20 years with Westland Insurance Brokers Inc. Reach her at (619) 641-3217 or

Tuesday, 24 October 2006 20:00

Peace of mind

In today’s business climate, it is important to have as much information as possible when making decisions. Most of us would not enter into any type of legal engagement without the services of an attorney. Is the need for a trusted financial adviser any less important for every financial aspect you might have?

“The primary reason for having a trusted financial adviser is to provide you with peace of mind,” says Todd Carter, private client manager at ViewPoint Bank.

There are a number of things to consider as you choose your financial adviser. Smart Business talked with Carter about choosing the right one.

What should the client’s objectives or goals be for selecting a trusted adviser?
It will be different for everyone, but peace of mind has to be at the top of the list. Clients need to know that the adviser can handle not only their business finances but personal finances as well. They can sleep easy at night knowing their finances are being handled, giving them more time to concentrate on running their businesses.

The client also needs to realize the adviser is there to help recognize and identify the financial areas that need to be improved upon. The client should look at the adviser as a consultant who provides solutions to problems that the client may or may not be aware of.

What characteristics make up a trusted adviser?
The trusted adviser should go into each relationship with the same basic goals, but then tailor the program to the needs of that individual. I think the adviser should be the ultimate in customer-focused service. It means viewing clients as individuals with goals, concerns and solvable problems and not as the next sale to meet a sales goal or someone to fill a quota. It requires active listening, probing questions and recommending solutions that best fit the clients’ needs.

What benefits can a client expect from an adviser?
Trust is first and foremost. Both the client and the adviser have to be open with everything.

The client should expect the adviser to come with a plan. That plan will be fine-tuned to meet the needs of the client. The client should expect the adviser to communicate a detailed plan while keeping it simple, in an easy-to-understand format.

The adviser should be expected to have a complete understanding of the client’s goals and objectives in order to be more precise in his or her recommendations. A good adviser will also know when other experts are needed and will have the resources and people to leverage in those situations. This presents a ‘one-stop-shop’ for the client, making it convenient to do all of his or her business at one financial institution.

Are there things a client should avoid when choosing an adviser?
Yes, the client should avoid a person with lack of experience or not enough tenure in the industry. Also avoid someone concerned only about sales goals and not the well-being of the client. Avoid a company that doesn’t have a good reputation in the industry or the community. The character of the adviser and the bank should be above reproach.

Is there anything that the client should not tell the adviser?
To begin with, clients will probably have mental checklists of things they are comfortable starting out with. Start out by finding a common ground. It is the adviser’s job to know not just the personal side or business side but how they all fit together.

As trust is built, the client discovers that there is nothing he or she should keep from the adviser. Withholding information can be detrimental to the success of the adviser’s recommendations and overall plan for the client.

Should there be an expected return on investment when using a trusted adviser? If so, how is it determined?
Yes, there should be. Each situation is different and is determined differently by each client. It’s hard to put a price on ‘peace of mind’ and knowing your financial needs are in good hands. One customer might want high-level service; however, another customer might measure satisfaction by the amount of return he or she received on investable assets.

Service expectations and expected returns need to be clearly defined and communicated to the adviser in order to determine how realistic they are and to ensure both parties start out on the same page. Communication is so important in these situations and ultimately determines the success and growth of the relationship.

TODD CARTER is private client manager at ViewPoint Bank. Reach him at (972) 509-2020, ext. 7380 or

Friday, 20 October 2006 13:06

Portfolio building

The interest in executive education continues to grow across the U.S. Employees and employers are recognizing the need to reinforce and reinvigorate their won leadership capacities and those of others within their organizations.

There are now more than 2,000 corporate universities in the country. They provide a mix of programs and delivery methods. Companies and individuals are looking at the opportunities and making choices that will affect their growth potential throughout their life span.

“Today, particularly, new entrants in the work force are becoming portfolio workers,” says Dr. Timothy Mescon, Dean Dinos Eminent Scholar chair of Entrepreneurial Management, Coles College of Business at Kennesaw State University. “They are interested in building their own resume or portfolio. At the same time, companies are recognizing the need for more knowledgeable leaders. These intersecting interests are driving the creation of more opportunities and the need to carefully consider the options.”

Smart Business talked with Mescon for more information on executive education and some of the things that employees and employers should consider.

What is driving the interest in executive education?
The world of business is moving at an incredibly fast pace. Companies are looking for better leaders who are equipped with the most up-to-date information and skills. Employees are looking at adding skill sets to be better able to compete in the changing marketplace. Education becomes a team retention tool that is very important to the employee and a plus for the organization. We like to say, ‘learn today, lead tomorrow.’

What are some of the things that companies need to consider?
There are three main areas of education available. They are specific skill development, leadership development, and special tracks for high potential (HiPot) candidates. The special tracks for the HiPot managers are accelerated programs.

Companies need to determine what skills and qualities will best serve them and seek out the programs that will meet those needs. The key is the applicability of the knowledge.

How are these programs being delivered?
What we see evolving is a mix of the traditionally delivered onsite and the emerging online programs. There is still a place for, and many benefits of, an interactive person-to-person education.

Twenty-four-hour access is an expectation of the younger generation. They are looking for programs that are convenient to them and not necessarily the organization. Location and variety of programs are also factors. Both forms of delivery have their benefits, and we are seeing them used effectively in tandem.

Who is paying the costs of these programs?
It is a combination of both the company and the employee. Pro-active companies are providing many opportunities. Smart employees will augment whatever is available from their company with things that complement and help build their own portfolio.

Employees need to control their own destiny. Most of the costs of many of the captive in-house MBA programs are paid for by the companies. Some companies pay only for credit courses and others pay for credit or noncredit. It may depend on their goals.

How important is credit over noncredit?
The individual needs to decide for themselves and in conversation with their employer the importance of degrees. Credit may be very important in some cases and in others not so important. It is up to the individuals to give the proper assessment and due diligence in determining what is best for them. Some programs have the option of credit or not. There is usually no difference in cost or content. A person may not be eligible for credit because he or she already has an MBA or may not have the prerequisite courses to obtain credit. Thus, more choice is available.

What do you see in the future for executive education?
There are unique alliances developing that reflect the changing expectations of corporate America. We are starting to see ‘pay-for-performance’ models. If XYZ Corporation doesn’t receive what it expects from a contracted program, it doesn’t pay for it. This puts the onus on the university to provide the program the company wants in a way that the participants fully grasp.

There is a profound amount of research that supports the fact that corporate entities that provide more education do better.

TIMOTHY MESCON, Ph.D., is Dean Dinos Eminent Scholar chair of Entrepreneurial Management, Coles College of Business, Kennesaw State University. Reach him at (770) 423-6425 or