And the tax consequences of these products remain uncertain. Insurance company attorneys take the position that policyholders owe ordinary income tax on dividends and interest and capital gains when clients draw down the managed accounts for income. Once the investment is depleted and the annuity kicks in, about 60% of the annuity income is taxed. The rest is considered a return of principal, based on the IRS's published "exclusion ratio."
Also, be aware that insurers can raise the annual fee for SALB protection during the life of the contract. And the insurance coverage typically is not transferable.
--Alan Lavine
Francais Succeeds Kochis As Aspiriant CEO
Rob Francais will become chief executive of Aspiriant on November 1, replacing longtime industry leader Tim Kochis in a transition that was planned roughly two years ago when both executives' respective firms merged to become one of the nation's largest independent wealth management companies.
Aspiriant, which officially formed in January 2008 when Kochis Fitz in San Francisco teamed up with Quintile Wealth Management in Los Angeles, has nearly $4 billion in assets under management and ambitious plans to expand around the country from its California base.
Kochis will take a six-month sabbatical, during which he and his wife plan to travel to three continents and Hawaii. When he returns, Kochis will be chairman of the board and will focus on client relationships and business development and strategy.
When Aspiriant was created, the game plan called for Francais to replace Kochis as CEO at the end of 2009. "One of the reasons we accelerated this transition to November 1 was because integration of the firm is proceeding at a faster-than-expected pace," Kochis says.
And one reason for that was the recent market downturn. "That really helped us focus and brought us together as a unified client-service organization faster than it might otherwise," Kochis says.
But the downturn also has crimped Aspiriant's original growth plans. Under a five-year plan approved by Aspiriant's board of directors, the company wanted to triple its AUM to $15 billion. "It might be more like $12 billion now," Kochis says. "But that doesn't change our strategy to grow both organically and inorganically."
Francais says Aspiriant's initial focus was on building its platform in areas such as governance, client service and investments. In March, the company began to embark on its fold-in strategy to add new firms and expand its number of advisors. The company currently has 75 employees and about 425 clients.
"We're meeting with different firms and we anticipate some sort of activity along those lines sometime next year," Francais says. He adds that possible expansion cities include Chicago, New York, Dallas, Atlanta and Seattle.
"The cultural fit of an organization is far more important than the geography," Francais says.
FPA's Top Lobbyist Stepping Down
Duane Thompson, managing director of the Financial Planning Association's Washington, D.C., office and one of the advisory industry's top lobbyists, left the organization last month.