Accountants can do much more than prepare your taxes. Stephen W. Christian, managing director at Kreischer Miller, offers some ways to work with your accountant to increase profits and grow your business.

Q: Can your accountant add value and help you increase your profitability?

A. Do you consider your accounting fees to be overhead or an investment? One stereotype of an accountant — bean counter, scorekeeper, tax preparer — deserves its connection with minimal value overhead. But the right accountant takes the historical numbers and information available and helps you navigate a path to increased profitability and a return on your investment.

Accounting firms add value in many ways, but one that C-suite executives are reaping the most benefit from revolves around determining and accessing the right information with which to make timely, informed decisions. Think of all the information embedded in a company’s systems — production statistics, time and productivity information, supplier and customer data, margin analyses, etc. Your accounting firm can assist you in harnessing it.

First, determine the information that would put you in the best position to make decisions and monitor activities. What are the key performance indicators? Your accountant can assist you in determining the appropriate indicators. You can then develop the type of dashboard report you would like to review.

Your accounting and technology teams can assist in automatically populating the dashboard reports. You will be able to review critical information on a daily, weekly or monthly basis from any smartphone, tablet or computer. Stop wasting time with the incredible amount of useless information available to all of us. Work with your accountant to focus on utilizing only the relevant data, putting you on a path toward timely, better decisions that lead to improved profitability.

Stephen W. Christian is a managing director at Kreischer Miller. Reach him at (215) 441-4600 or

Published in Philadelphia

Bonds have historically been an investment of choice for those looking to diversify their portfolios. Today’s market is no different, but the challenge comes in determining what types of bonds to invest in and the length of time to invest, says Jim Bernard, CFA, senior vice president and director of fixed income portfolio management at Ancora Advisors LLC.

“A prudent move right now in our opinion is to focus on bonds maturing within a three- to seven-year time period,” says Bernard. “Interest rates are very low right now, so it may be tempting to go out to longer dated bonds to get yield. But most investors should be very careful about locking their money up for too long a time. If interest rates increase, the value of existing long dated bonds will likely decrease materially in value. It would then be a long time until maturity before investors get their money back at par value.”

Smart Business spoke with Bernard about the value in U.S. fixed incomes markets and the primary risks faced by investors.

Can you put today’s interest rate environment into historical perspective?

Interest rates have been historically low for three years, and that low interest rate environment is probably going to last another three years, possibly longer. If you keep money in short-term CDs, you will get what you are getting today, which is close to nothing.

Interest rates will begin to increase when the economy and/or market improve. Or, if those things don’t occur, but commodity prices or inflation spiral up, then interest rates will also go up. However, we don’t see a materially better economy for the next few years, and although there may be slight job growth, we think the job market will remain very difficult.

What are the primary risks fixed income investors face today?

First, how can you get any legitimate return on your money without buying long-term bonds or bonds of questionable quality? If you buy a low-rated bond, the probability of getting your all money back at maturity declines.

To get a decent yield, you have to go to long maturity bonds that are going to be due in 15 to 30 years. The risk is that if interest rates were to go up materially in the future, then the value of your bond declines materially.

For instance, if today, you buy a good, AA 15-year corporate bond that yields 4.5 percent, that is great for today. But if in four years interest rates go up and an 11-year bond is trading at a yield of 8.5 percent, the face value of your bond would go down to about 65 cents on the dollar to be yield competitive in the higher interest rate environment.

At that point, you have a decision to make. You are earning 4.5 percent, but you could buy a new bond to earn 8.5 percent. However, the only way to do that is to sell your bond at 65 cents on the dollar. Do you want to take a loss to get more income, or are you going to continue earning 4.5 percent while others earn 8 percent? That’s the dilemma.

That’s why three- to seven-year bonds may be the best move today. If you construct a portfolio of these bonds, for an average maturity of five years, interest rates may go up in three or four years. In that instance, you may not be happy in the short term, but you’re going to have access to your money at face value in the next one to three years, which is better than 10. The price of those bonds will go down but they will mature at face value, and you will know what the future value is and know when that is coming back to you.

How do you view the current municipal bond market?

We like municipal bonds and think they are a good value, but people have to be very careful of what they buy.

We recommend bigger rather than smaller issuers in this uncertain market. There may be municipal defaults on the smaller end of the spectrum over the next few years, as opposed to states and larger issuers.

If a $15 million sewer district bond were to fail, the state of Ohio would survive, even if bondholders didn’t get back all of their money. However, if a multibillion dollar issuer were to fail and not pay back bondholders 100 cents on the dollar, that would have huge ramifications. Issuers with significant size may be too big to fail, but every municipality may not be bailed out.

Are non-U.S. dollar denominated sovereign bonds a good investment?

U.S. currency has been weak against other currencies over the last decade or so. Our view is that until we adequately address our fiscal problems here in the U.S., the dollar will continue to do worse than currencies of countries that are more fiscally disciplined.

We don’t know what the ultimate outcome is going to be with the euro, but we are very concerned. The yen is also uncertain. But we have identified five to seven currencies that we believe are better fiscally positioned and have been more responsible from a budget perspective. We would rather own their government debt than ours because we believe their currency will do better than ours.

We recommend buying three- to seven-year non-euro zone bonds in countries with solid economic positioning and finances.

What are the keys to being an effective long-term fixed income investor?

You have to understand the structure of the bonds you are looking to buy. Is this a bond in which you have a high degree of confidence that you will ultimately get all of your money back? With stocks, you want growth and higher earnings, but with bonds, you care a lot about the issuer’s balance sheet and less about their income statement, because the balance sheet will ultimately determine whether you are going to get your money back.

Jim Bernard, CFA, is senior vice president and director of fixed income portfolio management as well as an investment advisor representative of Ancora Advisors LLC, (an SEC registered investmentadvisor). In addition, he is also a registered representative and a registered principal of Ancora Securities, Inc. (Member FINRA/SIPC). Feel free to contact him at or (216) 593-5063.

Published in Cleveland

Many of us have investments scattered among multiple money managers. If they are not working together, a lack of coordination among those managers could be costing you a lot of money, says Norman M. Boone, founder and president of Mosaic Financial Partners Inc.

“If all of your accounts — trusts, 401(k)s, IRAs, individual accounts, joint accounts, etc. — are under one broker, that person will have a clear picture of everything that is going on across those accounts,” says Boone. “Most investors have no idea how much it may be costing them to have different parts of their portfolio under different managers. This is especially true for the taxable part of your portfolio.”

Smart Business spoke with Boone about why one hand needs to know what the other is doing and how to find  an investment adviser who can maximize the tax advantages across your accounts.

How can having accounts across different managers cost investors money?

Let’s say you have $500,000 to invest, and your broker puts your account with three different account managers who are buying individual securities. Typically, they do not communicate with one another about their trades and holdings. This can create a couple of problems. The first issue is that they may be investing in many of the same securities; instead of decreasing risk through diversification, you instead get more risk due to the overlap.

Another pitfall would be if your three managers all avoided a particular industry, for example, the oil industry. The empty places in your portfolio further defeat your desire to diversify. Most managers manage what they are familiar with, and if they are not familiar with oil, or international markets, or emerging markets, for example, that could leave holes in your portfolio.

Both of these problems are caused by the failure to have someone seeing the whole portfolio, to make sure all the bases are covered and that there is no overlap. The lead adviser would make sure there is exposure to large and small cap U.S. stocks, large and small cap international stocks, emerging markets, bonds, real estate, etc.

How could a lack of coordination among managers negatively impact an investor’s tax situation?

According to the ‘wash sale’ rule, if you sell a security at a loss, you can only make use of that loss for tax purposes if you do not buy that same security during the 30-day period before or after the sale. In other words, you lose the tax advantage available when you have a loss. For example, if you sell a stock at a loss and, within 30 days before or after that sale, you also buy that same security, the tax code forbids you from making use of any loss you may have incurred on the sale of that stock.

The rule becomes important in a portfolio that’s being managed by multiple managers. For example, say you have Manager A and Manager B, both of whom oversee a part of the portfolio. Manager A likes IBM and owns the stock in the portfolio. Manager B doesn’t own it yet, but he likes it. Manager A then sees a better opportunity, sells the stock, and assumes the loss on the sale. He thinks he’s helping the client and saving him some tax dollars on the loss. But Manager B, operating independently, buys IBM 20 days later, eliminating the tax saving opportunity created when the stock was sold at a loss.

If there’s no coordination between those managers, the result could be very costly.

How can an investor avoid this issue?

Find an organization that will manage your money in a more coordinated fashion. That firm should be managing all of your accounts, so it knows what is being bought and sold across the portfolio and can make sure someone isn’t buying something that was just sold previously by someone else. This coordination is important if you want to be able to take full advantage of tax laws, and if you want your portfolio to be properly diversified.

Losses can be carried forward forever, until they are used by the taxpayer. As the market returns to strength, having losses ‘banked’ can result in significant tax savings for your portfolio.

What questions should an investor ask when looking for a broker?

Beyond the basic questions addressing how money is managed, questions you might ask include: Do you do tax loss harvesting for my individual portfolio? With separately managed accounts, the manager doesn’t typically know who the clients are and just manages the money without considering the tax consequences for the individual client — and sometimes without even knowing who the client is.

Other questions to ask: How do you coordinate with other managers? How do you manage the wash sale rules to ensure maximum benefit? When managing money, do you take into account individual tax needs? How many clients do you have?

If brokers have 1,500 clients, they may invest in the best small cap stocks, but it’s impossible for them to individually manage the tax needs of each of their clients. You need to find an adviser who manages with that objective in mind, who is sensitive to the costs and considers the tax consequences that reflect your situation, not someone who is just managing money the way he or she wants to manage it.

Norman M. Boone is founder and president of Mosaic Financial Partners Inc. Reach him at (415) 788-1952 or

Published in Northern California

When most leaders think about ways to build wealth, the idea of insurance often doesn’t register with them.

It’s for that reason that Howard Slater joined forces with other financial planners and wrote “Plan of Action, Strategies to Help You Build and Preserve Wealth.” Slater is the founding partner for Cedar Brook Financial Partners LLC in Cleveland, and the fifth chapter of the book is his and addresses insurance.

“One of the keys to my practice is helping people understand the importance of insurances,” he says. “It’s a dirty word in the financial planning world — people either believe in it or they don’t, it’s a religion-like thing. The reality of it is, insurance is an asset, and it needs to be used properly.”

For example, unlike many of your other traditional forms of investments, if you make a huge mistake with your insurance, it could be detrimental to your portfolio because you often don’t get a second chance, which is why it’s so important to focus on upfront.

“You get ill, and it’s difficult to be underwritten by more insurance,” Slater says. “Insurance planning as part of financial planning is truly a key asset that gets overlooked.”

So what should you do? Slater says you have to write down all of your insurances. What benefits do you have at work? What group benefits do you have? Are they one-time, or do you have the ability to buy more? What do you have individually? What does your spouse have?

“Make a list and make sure you know exactly what the benefits are,” he says. “Then through your own research or analysis or working with somebody, determine where you need to be. What is appropriate given what your situation is -- where you’re at now and your future.”

He says you also need to plan for immediate situations, such as if you were to die tomorrow or become disabled. Look at who’s dependent on you now, and who’s dependent on you in 10 years.

Then he says to do an annual review of your insurances to make sure you’re still covered well and your needs will be met.

By doing these things, you can better ensure your future.

How to reach: Howard Slater, (440) 683-9207 or

Published in Cleveland

Charles Hammontree believes in following his leadership instincts and giving his employees what they need to succeed. His instincts have been leading Hammontree & Associates Ltd., a civil engineering firm, for many years now. Through his experiences and his success, Hammontree, president and CEO, has helped the 51-employee firm continue its steady growth.

“As I mature in this position, my instincts seem to be paying off,” Hammontree says. “Part of it was seeing some opportunities that competitors didn’t see and delivering a service and expertise on a level that’s hard to match.”

The combination of his leadership instincts and his company’s ability to follow his lead and back up his plans with results has proven successful and led the firm to their best year yet in 2010.

Smart Business spoke with Hammontree about how to successfully grow your company.

What can a leader do to differentiate their business?

Don’t follow the crowd; follow your own instincts. Find out what the crowd or your competitors are doing and do something different or sometimes do the opposite. If they’re going after one market sector and they’re all competing and the odds are low that you’re going to make an impact, go to a different area and find another source for your services. Go where the probability is better that you’ll succeed.

How can a leader of a company help its staff be successful at their jobs?

You have to lead by example; you can’t just talk. You can’t just tell people what to do. You have to go in when something’s hard to do, and [employees] have to see that you’re willing to do what’s hard for the benefit of the firm and the group. You’ve got to be responsive to your team, and if there’s something that they need to succeed, you have to see that they get it. I like to give all my people the tools to succeed rather than have any excuses not to. My staff comes to me with recommendations and my philosophy is to say yes and give them what they ask for more so than to say no. I trust them and put the onus on them to deliver with what they think they need to succeed, and more times than not, that pays off and we get a return on those investments.

What are ways to grow a business once it is doing well?

If I have a section or a sector of business that’s doing well, I like to use our resources to reinvest into that sector and make it even stronger. I will invest some resources in less profitable sectors but not the lion’s share. You don’t want to use your resources to invest in something that’s less likely to have an immediate or even a long-term return on that investment. What you’re doing well in, you should keep doing and keep investing in and play on that strength. Focus on what you do well and invest in that and do more of it and do it even better and expand on it rather than trying to beat the dead horse with something that’s struggling.

How can a business plan for growth and new possibilities?

As the CEO you have the overall picture. You have to bring your team members together who have different parts of a solution to a new offering. You have to build confidence in the staff that they can deliver and approach that market. It’s about networking your own team members and having the overall picture. You have to think about bringing in good capable people who like to work and like the work that you have for them to do. If you can get those two ingredients, that’s a good formula for success.

How can a CEO keep in touch with employees as the company grows?

Let them know you’re involved and part of the team. Keep in contact with your staff. It’s all one family and you’re all part of the same team. You have to be visible and you have to have an open-door policy. You can say it and you can encourage it, but I think the average staff member is still a little intimidated. They don’t want to fall in disfavor with the CEO or the boss. You have to let them know that you’re there to make them happy. Even if they can’t physically walk through your door they’ve got to know they can call you anytime or e-mail you and you’ll be responsive to them. Just like a project manager has to be responsive to his customer, a CEO has to be responsive to his staff.

HOW TO REACH: Hammontree & Associates Ltd., (330) 499-8817 or

Published in Akron/Canton

As we enter the second month of 2011, it’s time to think of some of the resolutions made just a short time ago. For some, it was to lose weight, eat better and exercise more frequently; for others, it was to save more and invest wisely.

As more and more people are increasingly concerned about the viability of our nation’s Social Security system, the focus has continued to shift toward providing for our own retirement, says Mark G. Metzler, director, Audit & Accounting, at Kreischer Miller.

“One mechanism that owners of businesses and their employees often have is their company’s 401(k) retirement plan,” says Metzler. “Because many people are not professional investment managers, an option provided in many plans is ‘target date retirement funds,’ sometimes referred to as ‘target date funds’ or ‘lifecycle funds.’”

Smart Business spoke with Metzler about target date funds and how they can work for you.

What are target date funds?

Target date funds, which have grown in popularity in recent years, are long-term investments, typically mutual funds that hold a mix of stocks, bonds and other investments designed to reduce overall risk. The funds are generally structured as investments for individuals with particular retirement dates in mind. The name of the fund often refers to its target retirement date (e.g., Retirement Fund 2025). As a fund gets closer to its named target date, the investment mix shifts to become more conservative.

This is appropriate because an individual nearing retirement may wish to have his or her investments become more liquid to provide for living expenses, as well as to minimize losses in a volatile market. Ideally, the target date retirement fund concept is a simple way to provide for professional portfolio management. The investment firms sponsoring the funds make the investment allocation decisions for participants based upon the target date.

Are all types of target date funds basically alike?

No. Funds that share the same target date may have significantly different investment strategies and risk profiles. The Department of Labor’s Employee Benefits Security Administration (EBSA) and the Securities and Exchange Commission (SEC) published an investor bulletin stressing that ‘participants should not rely on the fund’s target date as the sole criterion for selecting the investment because funds with the exact same target date may have entirely different risk strategies, risks, returns and fees.’

One of the most significant differences among target date funds is the construction of the ‘glide path.’ The glide path represents the asset allocation philosophy among equities, bonds, cash and other investments at various times throughout the investment life of a participant. Typically, all target date funds have a higher exposure to equities when the participant is furthest from retirement (at the beginning of the glide path) and steadily decrease the exposure to equities as the individual approaches retirement age.

However, different investment managers may have significantly different strategies for a similar target date fund.

The EBSA and SEC provided an example in their bulletin of the extreme differences between target funds with identical target dates. In the example, at its target date, Fund A had an asset allocation of 60 percent stocks and 40 percent bonds, while Fund B maintained an allocation of 25 percent stocks, 65 percent bonds and 10 percent cash investments.

Fund A does not reach its most conservative mix of 30 percent stocks and 70 percent bonds until 25 years after its target date.

How can funds with the same target date have such significantly different investment philosophies?

In the simplest terms, it depends upon whether the fund manager is investing ‘to retirement’ or ‘through retirement.’ When the fund manager invests ‘to retirement,’ it is anticipated that a significant portion of the portfolio will be liquidated at the target date to provide for living expenses, so therefore it would comprise a much smaller percentage of equities. Conversely, when a fund manager invests ‘through retirement,’ it is anticipated that the individual will continue to have a much higher exposure to equities and will continue to invest in the market throughout his or her retirement years.

In the 2008/2009 market downturn, participants close to retirement whose target date funds followed the ‘through retirement’ date philosophy were shocked at the large losses their funds suffered as they mistakenly believed they had been shielded from substantial loss by investing in a target date fund.

What should someone consider when evaluating a target date fund?

First, remember that all investments have some level of risk, and even the same type of investment may have more or less risk than other seemingly identical ones. Participants should read the fund’s prospectus to focus on:

  • When does the most conservative mix of investments occur?
  • What is the fund’s risk level?
  • How has the fund performed in the past, and what is the fund’s Morningstar ranking?
  • How does the asset allocation change over the life of the fund?
  • What fees apply?

Target date funds provide simplification to the average investor. While there is no magic pill that provides for a guaranteed return or that eliminates the risk of loss, target date funds do provide a level of portfolio management and complexity that is typically out of reach for most investors.

Mark G. Metzler is director, Audit & Accounting, at Kreischer Miller. Reach him at (215) 441-4600 or

Published in Philadelphia

Carina Diamond, SS&GWith many people living 10, 20 or even 30 years after retirement, planning for your financial future has become more important than ever.

While many people plan through the time up until their retirement, too many fail to consider the decades that could come after. If you live another 30 years after you retire, have you put yourself in a financial position so that your body doesn’t outlive your money?

“You really need to determine where your money is going and what might change,” says Carina Diamond, CFP®, the managing director of SS&G Wealth Management LLC. “If you can get your expenses lower now, then you can live a very rich retirement on less income.”

Smart Business spoke with Diamond about how to make sure that you don’t outlive your money.

How do you start planning for your financial future after retirement?

You first have to identify how much you are spending now and where that money is going. Any future planning must start with your current expenses, because what you’re trying to replace is the income that is paying those expenses. You need to determine what those expenses are, what can be eliminated and what will change going forward.

People tend to underestimate how much they are actually spending. Once you’ve determined that, you need to work backward from that to determine how much money you will need in retirement.

The next step is to define your goals. Some people may not know what those are, and that’s OK, but the point is to try to quantify as much as you can. For example, choose a few different ages at which you think you might want to retire, say 60, 65 and 70, then work backward from that and talk about the lifestyle you’d like to have. People used to think that expenses went way down in retirement, but in fact, expenses tend to stay the same or increase as people travel or do other things they didn’t previously have time for. When people are no longer in the office all day, they have more time to spend money.

How much does someone typically need in retirement?

People used to say you needed $1 million, or half-a-million, but there is no magic number. Instead, you need an income stream that you can’t outlive. It’s all about the income that your investments can generate that is going to determine your lifestyle.

There are a number of things you can do to plan for an income stream that is there when you need it, and it starts with projections of what you need to spend. Once you have that, you need to evaluate your investments with your adviser to make reasonable projections of what those are likely to grow to. You also need to look at income from a number of different sources, such as dividend-paying stocks, rental property, any ongoing consulting you might be doing and annuity investments.

Once you’ve done that, the next thing to consider is your withdrawal rate. The financial planning industry recommends that you don’t withdraw more than 4 to 5 percent a year. If you stick to that guideline, then statistically, there is a good chance that you will not run out of money. But if you start to take out more — and some people will have to — the odds increase that you will run out of money before the end of your lifetime. So if you have a million dollars, you should only be withdrawing 40,000 to 50,000 a year.

If you’re in your 60s and married, according to actuarial tables, there is a really good chance that one or both of you will live into your 90s. Thirty years is a long time frame, and to make your money work for you, you need stocks. People worry about the volatility of the stock market, but if you don’t do anything to grow your money, you are incurring the very real risk of inflation. If you’re not investing for growth, you may think you’re being conservative, but you’re taking a real risk of losing purchasing power.

How important is diversification of assets?

Every person is different in terms of their investment portfolio, depending on age, tax situation, preference and other factors, so there’s no one thing that everyone should be invested in. The biggest thing is to diversify between asset classes in investments that don’t all perform the same way in different economic scenarios. You don’t want them all to do badly if the economy is weak and you don’t want to have all your money in investments that are interest-rate sensitive. A professional investment adviser can help you make the best decisions for your situation.

How does health factor into the equation?

Health is one of the biggest wild cards. You can do all the planning in the world, and have the best investment manager in the world, but if you get sick and need long-term care later in life and you don’t have coverage for that, that can be devastating. It can ruin your whole financial plan, so you also want to do long-term care planning; consider buying long-term care insurance if you can qualify for in-house health care and a nursing home. It’s the No. 1 thing that people forget about, or just don’t plan for. But it is a major wild card that can really disrupt an otherwise sound plan.

It is generally recommended that you start considering it in your early 50s, but it’s getting harder to get and getting more expensive, so you may want to consider buying it earlier.

Carina Diamond, CFP®, is the managing director of SS&G Wealth Management LLC. Reach her at or (330) 598-2208.

Published in Akron/Canton