Beyond The 'Big Two'
When it comes to college financial planning programs, many advisors see the landscape like this: Texas Tech and Virginia Tech and everyone else. "I know there are others, but they aren't marketing themselves well because when I think of the top schools it's always Texas Tech and Virginia Tech," says Michael Dubis, an advisor in Madison, Wis.

There are 95 bachelor's, 40 master's and five PhD programs at colleges and universities in the U.S. that teach a financial planning curriculum that satisfies the education requirements of the Certified Financial Planner Board of Standards Inc. They come in a variety of shapes, sizes and academic departments, but the basic goal is to provide the coursework to enable students to sit for the CFP exam.

If the so-called Big Two of Texas Tech and Virginia Tech seem to overshadow the rest, it's not without reason. They boast sizable resources and faculty to teach a large number of students and create a visible presence in the advisor community by sending their students to industry conferences and placing them in internship programs. That ultimately leads to jobs and creates thriving alumni networks. In turn, that creates a virtuous circle that feeds success.

"Part of it is size and synergy," says Ruth Lytton, director of CFP programs at Virginia Tech. "Part of it is the willingness of students to relocate, because when you do that you spread the perception of quality in a way smaller schools don't have the opportunity to do."

Jon Yankee, a partner at Fox, Joss & Yankee LLC in Reston, Va., notes there are many high-quality programs around the country with a strong regional presence. "It depends on where you are in the U.S. regarding what schools you hear about," he says.
Nonetheless, Yankee says his firm turns to Texas Tech and Virginia Tech to attract students for the two interns it hires each summer.
John Grable, a professor at Kansas State's Institute of Personal Financial Planning (and a Virginia Tech grad), says his school's relatively low national profile stems in part from the propensity of its students to stay in the region. Another reason comes down to resources--or a lack thereof. "We turn away students because we don't have enough faculty members to teach the courses," he says.

Grable might lament Kansas State's available resources, but its six faculty members make it seem like a juggernaut compared to, say, Utah State. "With the help of a finance professor, I basically carry the whole load," says Vance Grange, a tax professor and director of tax and personal financial planning programs at the university's school of accountancy.

Due to a lack of faculty members, Utah State set up its financial planning program as an undergraduate minor, as well as an area of specialization in the master's of accounting program. Grange says students from a variety of financial-oriented disciplines take the coursework, and he encourages his tax students to take as many financial planning courses as possible because they might need those skills someday at a CPA firm.

"People who hire our students get someone with a degree in accounting, finance or economics, plus financial planning training," Grange says. "And they say they like it that way because the people they hire have additional skills they can build on."
Now, if only Utah State could get the word out. "My department head said I should promote that more, but I wonder where I'll get the extra hours to do that," Grange says.

The Great American Inheritance Downsized
About a decade or so ago, a report by Boston College caused a big stir when it projected the U.S. would experience a $41 trillion intergenerational wealth transfer by the year 2052. Both heirs--and financial advisors--were licking their chops at the prospect of getting their hands on all of that money.

But two massive financial market downturns and a historic real estate crash later, a lot of people think that figure is wildly overstated. According to a recent report from the Center for Retirement Research at Boston College, it's estimated baby boomers will receive a total inheritance of $8.4 trillion in their lifetimes.

Of that $8.4 trillion, $2.4 trillion has already been received and the remaining $6 trillion is anticipated. Researchers at Boston College expect two-thirds of boomer households will get an inheritance, but the windfall will be unevenly distributed. For people fortunate enough to get a financial hand-me-down, the median amount is projected to be $64,000 and the mean to be $292,000.
To illustrate that point further, the report projects the bottom wealth decile to get an average of $27,000 versus $1.5 million for people in the top decile.

"All these numbers are sensitive to time discounting," says Anthony Webb, a research economist at the Center for Retirement Research. "When calculating an inheritance over a person's lifetime, you want to take inflation into account."

And, of course, other factors to take into account include ever-growing lifespans that will likely lead to mushrooming health care costs that can put a big dent into an inheritance. While any inheritance money that boomers receive will be greatly appreciated, it won't be a big difference maker for a lot of recipients and they shouldn't view it as panacea for their financial situation.
"An anticipated inheritance isn't a good substitute for good financial planning for retirement," Webb says.

American Funds Deemed Best Fund Family
The American Funds scored best in positive perception in a recent survey of financial intermediaries, including advisors. The survey, conducted by kasina and Horsesmouth FA Vision service, found American Funds had the highest score by far in the FA Vision Brand Index, which rates how a firm is perceived based on attributes that include dedication to advisors, global expertise, ethics, cost, innovation and trustworthiness.

American Funds' weighted index score of 25.06 was roughly three times the scores registered by The Vanguard Group (8.58) and Franklin Templeton Investments (8.46). The rest of the top ten comprised BlackRock (excluding iShares), PIMCO Funds, iShares, Fidelity Investments, Dimensional Fund Advisors, Ivy Funds and Oppenheimer Funds.

"It is notable that the top brands on the FA Vision Brand Index are not only the traditional powerhouse brands in the advisor marketplace like American, BlackRock and Franklin Templeton, but also firms such as DFA, iShares, Ivy and Vanguard, which would not have shown up on this list only a handful of years ago," says Lee Kowarski, principal at kasina. "This shows that advisors are open to new offerings and underscores the importance of maintaining a powerful brand for established players."

Vanguard, long a leader in the direct-sold category, is now making significant headway in the advisor-sold market.

BlackRock was chosen as tops in innovation by 10.9% of advisors, but Kowarski said that low of a score indicates that none of the fund families are "particularly innovative." "This leaves a large void for innovative asset managers to fill," he said.

What You Should Know About LTC Deductions
Long-term care insurance has become increasingly important as the first wave of baby boomers turn 65. When advising clients about this much-misunderstood product, consider the variety of tax advantages that can come with LTC policies.

For individuals who itemize their tax deductions, LTC insurance premiums can be deducted as a medical expense, says a new pamphlet from the American Association for Long-Term Care Insurance, a trade group based in Westlake Village, Calif. But as with all medical-expense deductions, only those that exceed 7.5% of adjusted gross income are deductible.

There's also a maximum deductible amount, depending on the person's age at the end of the calendar year. For 2010 taxes, the upper limit is $330 for people age 40 or younger. It jumps to $620 for ages 41 to 50, $1,230 for ages 51 to 60, $3,290 for ages 61 and 70, and $4,110 for people 71 or older. These limits increase annually.

If there is an age difference between spouses, they can maximize the deduction with a "shared-care" LTC policy, which allows couples to divide benefits as needed. For example, if the husband uses three years of benefits in a 10-year shared-care plan, the wife retains the remaining seven.

In addition, those in a high deductible health insurance plan with a Health Savings Account can use the HSA to pay their LTC insurance premiums.

But if an employer pays all or even part of the premiums, the employee is not eligible for these deductions unless he or she is part owner of a partnership, LLC or Subchapter S Corporation. If the partner's spouse is an employee of the partnership, the full premium on the spouse's policy can be deducted, too.

LTC insurance benefits are never considered taxable income if they are used for legitimate long-term-care expenses, such as nursing homes or, in many cases, home-based assistance.

Deductions For Small Businesses
Small business owners can deduct the cost of LTC insurance for themselves, their spouses and other dependents. As a business expense, it's 100% tax-deductible.

Business owners should also know that LTC insurance can be offered to select employees, their spouses, and even retirees. Business owners can set the rules that determine who is covered and who isn't.

If LTC insurance is offered to employees, the employer does not have to pay payroll taxes on the premiums. The employees aren't taxed on the premiums paid by their employers, either.

Self-Employed Clients And Other Special Situations
The rules are somewhat different for self-employed people, who can deduct 100% of their out-of-pocket LTC insurance premiums up to the age-based limits delineated above. For the self-employed, it's not necessary to meet the 7.5% threshold to take this deduction. The deduction can include spouses and dependents.

A Subchapter S Corporation that buys a policy on behalf of any of its employees or their dependents is entitled to a 100% deduction as a business expense, just like any other type of employer. The deduction is not limited to the age-based cutoff.
And like any other type of employer, the Subchapter S Corporation can be selective in classifying which employees it chooses to cover under the LTC insurance policy.

Naturally, it's best to consult with qualified accountants and attorneys to make sure your clients are following all the rules and taking advantage of all the tax incentives available.
-- Ben Mattlin

U.S. Boutique Challenges Big Names In China
(Dow Jones) Chicago-based Schlindwein Associates LLC has just $160 million in assets under management, but it's got something many larger firms don't: an office in China.

The 15-year-old RIA, which manages money for high-net-worth individuals, opened a one-person Beijing office in late 2009 to gauge local investments and set the stage for advising Chinese clients. It is supervised by a former student of Schlindwein Associates' founder and managing director, Timothy Schlindwein, who used to teach at the University of Chicago.

The country's economy is booming and, according to the consultancy Capgemini, its millionaire population controls about 22% of the Asian-Pacific region's private wealth and expanded by 31% in 2009. Still, that doesn't fully explain why a firm of Schlindwein's size would create a presence 6,000 miles from home.

It clearly appealed to Schlindwein's sense of adventure. "There are things that just strike your fancy," he says. He's quick to add that China is only roughly analogous to post-Iron Curtain Europe. "Change is coming, markets are opening, but China is very complicated with a very different culture that can be hard to understand," he says.

A Beijing office gives Schlindwein Associates a better read on the Chinese economy and something of a profile in China's interlocking business and government circles. His former student, Xiaoli Chen Youker, so impressed Schlindwein at the University of Chicago's Booth School of Business that he hired her in 2008 to investigate China's demand for Western-style investment services.
Her research pointed to growing demand among affluent Chinese for advice on diversified portfolios and long-term strategies instead of traditional approaches favoring one-off transactions.

Further, Youker found signs that a small firm like Schlindwein Associates could compete with a constellation of global investment providers such as UBS, Credit Suisse, Deutsche Bank, HSBC and Citigroup, as well as state-owned giants like the Bank of China and the Industrial and Commercial Bank of China.

Schlindwein figures it will take years, maybe another decade, of spadework and networking before Youker can start adding Chinese clients. Meanwhile, he's happy to be on the ground there to gather intelligence on Chinese investments for the benefit of its U.S. clients.
Copyright © 2011 Dow Jones & Co. Inc.

Northern Trust Creates LGBT Family Practice
Northern Trust last month formally announced its Lesbian, Gay, Bisexual, Transgender (LGBT) and non-traditional family practice. The company, long one of the traditional blue blood firms in the wealth management industry, said the new practice will provide fiduciary and wealth management services for this non-mainstream market.

John McGowan will be the new unit's national practice leader in charge of rolling out the program in the 18 states where Northern Trust does business. Previously, McGowan was a senior relationship manager in Northern Trust's Wealth Management Group that focuses on ultra-high-net-worth families and their family offices.

"Northern Trust recognizes the definition of family has evolved," McGowan said. "We have been helping LGBT clients develop wealth management strategies for decades and have the experience to deal with unique legal, tax and wealth transfer challenges. The creation of this group will help ensure our strategic focus will be executed more broadly across our network."

Mark Braun will be the national practice liaison charged with building relationships with LGBT households, as well as community organizations. Previously, Braun was a private banker serving families and individuals.