News Archive
CHARLOTTE BUSINESS JOURNAL
John T. Gugle, CFP® of Alpha Financial Advisors, LLC was selected by the Charlotte Business Journal as one of their 40 Under 40 winners for 2006. The 40 Under 40 program was started in 1994 to annually honor 40 men and women under the age of 40 based on outstanding achievements both in business and community involvement. The award identifies people who are making major strides in their careers and impacting their communities.
The adviser you choose should be able to coordinate all your firm's financial needs while also maintaining a high level of trustCHARLOTTE BUSINESS JOURNAL
by Bea Quirk
A financial adviser can handle those tasks and more. The key, experts say, is to find one who can be the point person for a team of professionals, each with a specific expertise, such as an accountant, portfolio manager and attorney. Some financial advisers may be more knowledgeable about business matters, while others will be better suited to handle your personal finances.
"You need a cadre of professionals behind you with a financial adviser acting as a quarterback to coordinate everything, " says Michelle Maidt, principal of Carnegie Capital Advisors, a Charlotte-based wealth-management firm in Charlotte. "If you're a business owner, you're busy running your business, so financial matters often take a back seat, and you don't do what needs to be done. So you need a team of experts to run those other pieces for you."
But the team members need to act in tandem.
"There should be a relationship between them -- they call each other and talk when the need arises," says Al Winget, senior vice president of Wachovia Securities' Winget-Benton Group in Charlotte.
And while your business and personal finances are separate, keep in mind that "they dovetail with each other and interact with each other more than you expect," says John Gugle, a principal with Charlotte-based Alpha Financial Advisors.
Gugle suggest six factors to consider when choosing a financial adviser. He calls them The Six C's. They are:
- Certifications: Professional certifications indicate certain types of expertise and specialties, but they also demonstrate that the individual abides by ethical standards and participates in continuing education. The relevance of a particular certification depends on what you are looking for. A Certified Financial Planner, or CFP designation, indicates a broader set of training than a Chartered Financial Analyst, or CFA, which is required for brokers and demonstrates competence in portfolio management and investment analysis. Some certified public accountants may specialize in financial planning.
- Competence: You want an adviser who has experience working with small-business owners and addressing their financial issues and delivering services that meet their needs.
- Compensation: Financial advisers are usually paid through fees or commissions. If you are paying commissions, the adviser makes money based on the number of transactions your account generates. An adviser working for a fee receives remuneration based on an established fee schedule regardless of the number of transactions. Be sure to fully understand how your adviser is charging you, as well as any hidden costs, such as account maintenance fees, insufficient-balance fees, transaction costs and fund operating expenses.
- Conduct: Check the NASD Web site at www.nasdr.com to learn whether a prospective adviser has had any disclosure issues that would indicate improper or unethical conduct.
- Comfort: Are you comfortable with the adviser and feel a high level of trust? Says Winget: "Find someone with a temperament similar to yours. If you're a risk taker and the adviser isn't, it's not a good mix."
- Client references: Ask for the name of small-business owners who are clients so you can get a third-party perspective of the adviser's strengths and weaknesses. Also, ask your CPA or attorney for recommendations.
Bea Quirk is a Charlotte-based free-lance writer who can be reached at beawrites@aol.com.
Cecily Durrett introduced the speakers, John Gugle and Jim McGehee of Alpha Financial Advisors. John is a Certified Financial Planner and Jim is also a Certified Financial Planner and holds several other certifications in financial and investment management. Alpha Financial Advisers is a private, fee-only financial planning and investment management firm in Charlotte.
Working as a “tag-team,” Jim started with some thoughts on the current environment for investors. The access to information on the internet and the 24 hour a day business TV programs has somewhat leveled the field for private investors relative to the professional investor. The success of high-profile investors such as Warren Buffet and George Soros has not been in their ability to pick stocks, but in their ability to see the big picture and to see trends that will affect investments in the future. To be a successful investor in the long-term, you must be cognizant of the impact of government actions.
John then jumped in and said that over recent history, the 125 days leading up to a mid-term election have produced mixed results—six times the market was up and six times it was down; however, in the 125 days after the last twelve mid-term election where in every case the market was up. This is because the markets hate uncertainty and after an election, the uncertainty is reduced. For 2006-2008, personal finances will be affected by a number of political facts and trends:
- President Bush is going into his last two years in office with no heir-apparent. He has lost political capital in Congress in addition to being a “lame duck.”
- The Democrats may gain seats in the 2006 elections.
- Only one time since Republican Rutherford B. Hayes succeeded Republican Ulysses S. Grant in 1877, has the party of a sitting two-term President retained the presidency in the next election—that was when George H. W. Bush succeeded Ronald Reagan in 1989. Thus, it may be likely that the Democrats will win the presidency in 2008.
- Taxes are too high but Congress will not control spending so taxes are likely to go up.
- State and local taxes will continue to go up as programs are shifted from the federal budget to state and local governments. Infrastructure needs will have to be funded.
- The economy is going to face pressures in 2006, including higher inflation, interest rate increases by the Fed, declining home sales, increased cost of materials, and increased cost of oil.
- The next recession is likely to be demand driven as consumer spending declines due to reduced discretionary income.
- We are facing a loss of control of our own economy—for the first time, more corporate dividends are being paid to foreign investors than to domestic shareholders.
- Debt service is consuming a major part of disposable income.
- Savings is down.
- Foreclosures are up 68%.
- As increasing numbers of Americans are retiring, it is of concern that income of $25,700 or more puts one in the top 25% of income for those over 65 and that the retirement saving of the average American only totals $25,000.
- As a debtor nation, we have little control over much investment capital—if foreign nations started dumping our debt, our interest rates could skyrocket.
Jim then jumped back in for some prescriptions: keep investments well diversified, watch for investments that will still do well, maintain good cash reserves, and get good tax advice.
In questions and answers, Jim and John said that the housing sector would go down, inflation protection securities should be considered, and commodities (particularly construction materials) will likely go up. International diversification of portfolios should be increased. An increase in the tax on gasoline would increase gas taxes, reducing demand for gasoline and reducing the price of oil. Investments in alternative fuels might be considered. The liability for unfunded government pensions is enormous and the federal government should follow the lead of industry and move to defined contribution rather than defined benefit plans. Much of the federal budget is devoted to debt service and spending must be curtailed, programs must be cut or eliminated, and debt and interest must be reduced. It was interesting to note later in the day that a number of investors, having not been privy to today’s program, went on a stock buying spree that raised the Dow by 195 points for a 1.8% gain, the NASDAQ by 2.0%, and S&P 500 by 1.7%--all on news that the Fed may be near the end of its rate-tightening campaign.
CHARLOTTE OBSERVER
by Amy Baldwin
Should you pay for your child's college education?
It's a question many parents don't ask. They're more likely to wonder if they have a choice.
But there are two questions really. The first is financial. Can you afford it? The second is philosophical. Is it your parental responsibility to pay for Harvard, Duke, UNC Chapel Hill or Central Piedmont Community College?
In the height of the financial aid application season, these questions are worth studying.
Finance 101
Talk about a financial dilemma. College costs are running well ahead of inflation just as baby boomer parents are also staring down retirement.
"The reality is, not everyone has enough income to plan for retirement and pay for (even) some of the college costs," said Cynthia Block-Taylor, a financial planner with AXA Advisors, LLC in Ballantyne.
In inflation-adjusted dollars, college tuition and fees have risen 40 percent in the past five years, according to the College Board, which provides admissions, financial aid and enrollment services for colleges, students and parents nationwide.
The average total cost, including tuition, fees and room and board, for 2005-2006 at a four-year private institution is $29,026.
At public schools, this year's total tab averages $12,127.
As parents, you should not pay - for any or all - the college costs if you have to dip into your retirement nest egg or get a big loan that will mean you have to work forever, Block-Taylor said.
Newsweek personal finance columnist and author Jane Bryant Quinn agreed.
"It is really important to fund your retirement and then think of saving for college for your children second," Quinn said.
You're better off having your child take student loans, Quinn said. Often student loan interest rates are lower than those on loans parents take. Students also don't have to start repaying the debt until after they finish school (six months after graduating or leaving school for a Federal or Direct Stafford Loan and nine months for Federal Perkins Loans), whereas parents have to start paying back almost immediately. Plus, there's a saying: Some students can get scholarships for school, but no parents can get scholarships for retirement.
"(Parents) absolutely should not take a 401(k) loan. If their home is far from paid for, they cannot afford a home equity loan, because the only way you can make it through retirement is to have a paid-off home," Quinn said.
Quinn advised parents to be upfront with their children about what they can afford. That way the kids know what is expected of them - i.e. getting scholarships.
Parent Phyllis Sidebottom has had that discussion with her daughter Mandy Wheeler, a senior at East Mecklenburg High School.
"She knows I cannot afford it. I have talked to her about student loans," said Sidebottom, senior administrative assistant at Alexander Graham Middle School.
She plans to help Mandy, who wants to study radiology, to the extent she can, but she's not sure how much she can afford or where the money will come from. "I wish I could answer that, but I just can't," said Sidebottom, who recently attended a financial aid seminar at East Meck with Mandy.
Philosophy 101
The philosophical questions are harder. Is it your duty as a parent to pay tuition and room and board? Or will your kid take studies more seriously if he has some money on the line? Will your child be better or less equipped to handle finances if faced with student loans after graduation.
Tara McGehee, a stay-at-home mom in Waxhaw, believes strongly that children should pay their own way. She did. Her father co-signed a $60,000 loan and she repaid it, with interest, within five years of graduation.
"I Appreciated my education so much more, knowing I was paying for it. I worked harder to get scholarships," said McGehee, who majored in finance at Stetson University in DeLand, Fla.
McGehee would like for her three young children - Delaney, 7, Darcy, 3, and Duncan, 11 months - to pay for college because it builds the independent values she - well, values.
But her husband, Jim McGehee, a certified financial planner, feels differently - that it's the parent's job. He contributes to 529 college-savings plans for each of their kids, because he also believes tax-deferred college savings plans are good financial planning tools.
Tara McGehee has arrived at an intriguing compromise. She wants to make her kids think they are payi9ng for college. If they get good grades, she and Jim would give them a "generous present" that would pay for most or all of their college debts.
When beliefs don't cover costs
Often, philosophy and reality meet in a gray area.
In the Palcic family's house in Indian Trail, daily conversation centers on how to pay for daughter Amanda's college starting this fall. They discuss what the parents would like to do and what they can afford.
Parents Bob, 60, and Kathy, 58, aren't sure how much of their savings they can tap to pay for college and still have adequate funds for retirement. They know they have to factor in longer lifespans that their own parents and that neither is working right now.
Bob was laid off from a Northeast software firm three years ago and is working only part time in tax preparation. Much of the family's net worth came from the proceeds of the Boston-area home they sold last fall when they moved to North Carolina, seeking a cheaper cost of living.
Ideally, Bob said, he and Kathy would pay for whatever financial aid and scholarships don't cover. Bob has a financial background, having also worked in banking and leasing, and feels that young adults get off to a better start in life when they don't have big student loans looming over them.
But the reality is Amanda, who plans to major in communications, might have to take some student loans, especially if she goes to her first choice institution - Quinnipiac University, a private school in Hamden, Conn., where tuition, fees and room and board this year total nearly $35,000.
Ultimately, he said, the family will decide "as a team," where Amanda goes to college and how they pay for it. They first have to see how much financial aid and scholarships she gets.
If faced with big student loans, Amanda said she might opt for her second choice, Appalachian State University, where this year's total cost for in-state students comes to about $7,000.
"I don't want to be stuck paying off a ton of loans forever," Amanda said.
