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Sponsored by The Financial Planning Association of Central Ohio


What is the FPA?

Why hire a Certified Financial Planner ? A CFP® professional is an individual who has a demonstrated level of financial planning technical knowledge, experience in the field and holds to a client-centered code of ethics. CFP® professionals are dedicated to using the financial planning process to serve the financial needs of individuals, families and businesses. To earn the prestigious CFP® certification and remain certified as a CFP® professional, individuals must meet four main requirements. FOUR E’S TO BECOMING A CERTIFIED FINANCIAL PLANNER™ Education CFP® practitioners develop theoretical and practical financial planning knowledge by completing a comprehensive course of study at a college or university offering a financial planning curriculum registered with the Certified Financial Planner Board of Standards. Examination CFP® practitioners must pass a comprehensive two-day, 10-hour CFP® Certification Examination that tests their ability to apply their financial planning knowledge in an integrated format. Based on regularly updated research of what planners do, the

a strict code of professional conduct, known as the CFP® Board’s Code of Ethics and Professional Responsibility. The Code of Ethics states that CFP® practitioners are to act with integrity, offering professional services that are objective and based on client needs.

CFP® Board’s exam covers the general principles of financial planning, insurance planning and risk management, employee benefits planning, investment planning, income tax planning, retirement planning and estate planning. Experience CFP® practitioners must have a minimum of three years’ experience working in the financial planning process prior to earning the CFP® mark. As a result, CFP® practitioners have demonstrated a working knowledge of counseling skills in addition to their financial planning knowledge. Ethics As a final step to certification, CFP® practitioners must pass an ethics review and agree to abide by the CFP® Board’s Financial Planning Practice Standards and

RE-CERTIFICATION It is also necessary for every CFP® certificant, once certified, to complete a re-certification every two years. Those seeking to maintain their certification must attain a minimum of 30 hours of continuing education in order to stay current with developments in the financial planning profession and to better serve their clients. Two of these hours must be spent studying the CFP® Board’s Code of Ethics and Professional Responsibility or Financial Planning Practice Standards. FIND A PLANNER FPA’s PlannerSearch™ can connect you with CERTIFIED FINANCIAL PLANNER™ professionals in your area. To find a planner, visit: FindaPlanner/ CFP®, CERTIFIED FINANCIAL PLANNERTM and federally registered CFP® (with flame logo) are certification marks owned by Certified Financial Planner Board of Standards. These marks are awarded to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

The Financial Planning Association® (FPA®) is the strongest collective voice for the financial planning profession. The FPA has over 28,500 members consisting of financial planners, allied professionals, and organizations that champion the financial planning process. Members of the FPA receive numerous benefits such as networking opportunities with some of the best financial minds in the world, government advocacy, outstanding continuing education programs, practice management tools, career development assistance, and much more. The core values of the FPA are Competence, Integrity, Relationships, and Stewardship. Each member of the FPA agrees to adhere to a Code of Ethics that reflects their commitment to help clients achieve their life goals. The Financial Planning Association of Central Ohio has over 275 members. Our mission is to serve and inspire those who deliver, support, and need financial planning. We are having another successful year as all of our committees continue to find ways to improve our chapter. We continue to develop our pro bono efforts, which over time will allow us to provide financial planning to individuals and families who cannot typically afford such services. We are working with the financial planning students at The Ohio State University and Franklin University to help them with their career development through our “Student Spotlight” program, internships, networking and job opportunities. We are also supporting the OSU Student FPA in their on-going peer counseling service for students at the Wellness Center called Scarlet & Gray Financial. For two years now, members of the FPA of Central Ohio have been involved with Junior Achievement. Our partnership enables members of our organization to teach middle and high school students finance concepts throughout the central Ohio area. We have also developed a relationship with The Ohio State University and their CFP™ certification education program. This enables us to give our members another outlet when pursuing the CERTIFIED FINANCIAL PLANNER™ certification. Please visit our Web site at for more information regarding the FPA of Central Ohio. Pamela S. Birkenholz, CRPC President, FPA of Central Ohio


When it makes sense to rollover With unemployment hitting multidecade highs, more people are leaving their employers and retirement plans now than ever. A 401(k) rollover refers to the transfer of funds from an employer-sponsored program to an IRA or other qualified plan. A detailed analysis of your situation with respect to your 401(k) is warranted before taking action. Here are a few things to consider:

like Sand through an Hourglass During the past several months many families have struggled to their pay bills and make ends meet. By the time the bills are paid there is little left to fund goals such as your children’s education, saving for your retirement, maintaining an emergency fund, purchasing a home, buying a car, or even taking a vacation. You may ask yourself, “Where does the money go?” It is easy to become overwhelmed when setting up a spending plan for your monthly income. However, with proper planning you are more likely to reach your goals. There are five key steps to help you reach your goals:


1. Start by listing your goals 2. Prioritize your goals 3. Decide on a timeline to meet each goal 4. Project funds needed to achieve each goal 5. Calculate how much you need to set aside each pay check. For example: Saving for Retirement Beginning at Age 65 Amount needed: 80 percent of current income Amount to save: $100 per pay period Maintain an Emergency Fund in Two Years Amount needed: Three months worth of expenses Amount to save: $125 per pay period

Yearly Vacation Amount needed: $2,000 Amount to save: $88 per pay period New or Used Car in Three Years Amount needed: $10,000 Amount to save: $128 per pay period Professional financial planners can help you analyze projections and the investment needed to achieve each of your goals. Savings from each paycheck can be a great way to “pay yourself first” and save for your goals before the money sifts through your fingers like sand through an hourglass.

INVESTMENT SELECTION, CONTROL & EXPENSE 401(k) plans are typically set up with a limited menu of investments. Although there are typically adequate choices for diversification, you may have preferences that are not satisfied within the plan. Rolling it over to an IRA account may give you the additional flexibility you desire. In addition, you’ll find internal fund expenses are a wildcard — sometimes they are higher in 401(k) plans, and sometimes they’re not. While it’s difficult to determine expenses for your 401(k), your plan administrator must give you the summary plan document upon request, which is a good starting point.

LIQUIDITY NEEDS It’s rarely a good idea to withdraw from your retirement account for emergency cash. However, it’s nice to know you Pamela S. Birkenholz, CRPC have options, should you need them. 401(k)s do not Waddell & Reed, Inc. afford you the option to (614) 799-0373 x110 withdraw funds prior to pbirkenholz48370@ age 59½ without incurring


a 10 percent excise tax. IRA plans generally have the same restrictions but there is an out. You can utilize Rule 72t which allows you to take regular and on-going distributions. There are complexities to this, so speak to a professional prior to instituting. ESTATE PLANNING 401(k) company-sponsored plans tend to be more restrictive with respect to beneficiary designations. An IRA will allow you to set up multiple beneficiary designations for various investment strategies. In addition, as noted above, IRA’s allow you to

use “stretch” distributions whereas most 401(k) plans require a lump-sum to be taken soon after death of the plan participant. This can potentially have adverse tax consequences for the spouse or beneficiary. SIMPLICITY Often overlooked, having one IRA rather than multiple 401(k)’s can assist a professional in making investment decisions. Mark Fissel Beacon Hill Investment Advisory 888-614-4625


easy ways to

Super-Size your retirement savings Feeling helpless as you watch the market gyrations take a toll on your account balances? Consider these four ways to help recover some ground. Get to know your tax bracket and use it to your advantage. Tax rates are at historically low levels but that’s certain to change. It might make sense to pay off the IRS now. Making after-tax contributions to Roth accounts will provide you with tax-free income during retirement while every dollar of your

Traditional IRA and 401(k) withdrawals will be taxed as ordinary income. Pay careful attention to investment fees. Expenses reduce your effective rate of return, can have a dramatic impact on portfolio value and decrease standard of living in retirement. A mutual fund class A share will cost an up-front fee, or “load,” of about 5.75 percent. There are ongoing fees which might run an additional 1 percent per year. Comparatively, an exchange-traded index fund might cost you 0.25 percent per year with

no loads. Develop an asset allocation policy and STICK TO IT. Asset allocation, very simply, is the mix of equities and bonds that make up your portfolio. A carefully designed asset allocation can help you increase portfolio return while reducing portfolio volatility. No matter your level of risk tolerance, consider investing 10-15 percent of your portfolio in the stock market in an effort to outpace inflation. Rebalance regularly. Even a “buy and hold” passive investment strategy needs some tweaking from time to time. Examine your portfolio at least quarterly to ensure that dollars are aligned with your target asset allocation. A disciplined investor will sell off equities when they rally enough to be “overweighted.” Profits should be reinvested in an asset class that is not in favor. Being disciplined in your approach to asset allocation and rebalancing has been proven to add return to your portfolio in the long-run. Lori L. Embry, CFP® Fairfield Investments & Wealth Management, LLC (614) 481-8440


Does your feel out of reach? You need a plan.®

If you’re like many people, today’s uncertain economic times may have you feeling that your retirement goals are harder to reach. But did you know having a financial plan could help improve your outlook on retirement? At Ameriprise Financial, we’ve seen how true financial planning 1 makes a difference in the lives of our clients. Now a national study confirms that people with a comprehensive plan feel more confident and on track with their retirement goals — even in today’s volatile market. People with a comprehensive financial plan are more likely to say they: > > > >

Have a clear financial direction Feel well prepared for retirement Have rebalanced their portfolio Are on track with saving goals

To find out why more people come to Ameriprise for 2 financial planning than any other company, call (614) 310-0501 today. Montgomery and Associates A financial advisory practice of Ameriprise Financial Services, Inc. 450 W. Wilson Bridge Road Suite 150 Worthington, OH 43085 (614) 310-0501

Financial planning services and investments available through Ameriprise Financial Services, Inc., Member FINRA and SIPC. 1 The Financial Planning Association® (FPA®) and Ameriprise Value of Financial Planning study, was conducted by Harris Interactive in June/July, 2008 among 3.022 adults. While market volatility was significant during the study period, subsequent financial developments, which may have affected attitudes and behaviors, had not yet occurred. No estimates of theoretical sampling error can be calculated; a full methodology is available. 2 Based on the number of financial plans annually disclosed in Form ADV, Part 1A, Item 5, available at as of Dec. 31, 2008. © 2009 Ameriprise Financial, Inc. All rights reserved.




Join Financial Planners of Central Ohio in Celebrating

Pamela S. Birkenholz CRPC Waddell & Reed, Inc. (614) 799-0373 x110 President

Erin Gaeta CFP® Cephas Capital Management, LLC (614) 268-9153 Director, Pro Bono & Junior Achievement

Jamie P. Menges CFP® Investment Partners, LTD (614) 761-9087 President-Elect & Director, Career Development

Jason A. Eliason CFP®, ChFC Waller Financial Planning Group, Inc. (614) 457-7026 Co-Director, Partnerships

Jeffrey C. Gilbert CFP® PDS Planning Inc. (614) 481-8449 Co-Director, Membership

Michelle M. Merkel CFP® Merkel Financial Services, Inc. (614) 481-4455 Co-Director, Membership


Sonya R. Albery Raymond James Financial Services (614) 442-0214

Teri R. Alexander CFP® Alexander Financial Planning, Inc. (614) 538-1600

Aaron Armstrong CFP® Budros, Ruhlin & Roe, Inc (614) 481-6900

Diane E. Armstrong CFP®, CPA WealthStone (614) 267-2600

Shawn R. Ballinger CFP® Waller Financial Planning Group, Inc. (614) 457-7026

Brian W. Becker CFP® Hamilton Capital Management, Inc. (614) 273-1000

Geoffrey R. Biehn CPA, CFP® Trinity Financial Advisors LLC (614) 848-7667

Carl C. Buckner John Sestina and Company (614) 495-4500

Linda Campbell CFP® Budros, Ruhlin & Roe, Inc. (614) 481-6900

Joseph A. Chornyak, Jr. Chornyak & Associates, Ltd. (614) 888-2121

Joseph A. Chornyak, Sr. CFP® Chornyak & Associates, Ltd. (614) 888-2121

Robert A. Cochran CFP® PDS Planning, Inc. (614) 481-8449

Mark S. Coffey JD, CFP® John E. Sestina and Company (614) 326-3077 ext. 109

Connie E. Demers CFP® Demers Financial Planning (614) 451-4505

Kevin M. Doll MS,CFP® Hamilton Capital Management, Inc. (614) 273-1000

Ellen Dorle CFP® Dorle Financial

Daniel Due CFP® Budros, Ruhlin & Roe, Inc. (614) 481-6900

Clint Edgington CFA Beacon Hill Investment Advisory 888-614-4625

Andrea Ellis CFP® Budros, Ruhlin & Roe, Inc. (614) 481-6900

Lori L. Embrey CFP® Fairfield Investments & Wealth Management, LLC (614) 481-8440

Robert J. Eyen CFP®, CLU® Ameriprise Financial (614) 310-0501

Michael P. Faieta CFP® Hamilton Capital Management, Inc. (614) 545-4011

Jason E. Farris CFP® Waller Financial Planning Group, Inc. (614) 457-7026

Douglas Feller CFP® Investment Partners LTD (614) 761-9087

Mark A. Fissel Beacon Hill Investment Advisory 888-614-4625

Andrew E. Fugazzi CFP® Ameriprise Financial (614) 310-0501

Peter S. Geldis CFP® Hamilton Capital Management, Inc. (614) 273-1000

Gwen Gloeckner CDFA Gloeckner Financial Group (614) 310-2400

Paul A. Gydosh Jr. CFP® Kensington Wealth Partners Ltd. (614) 431-4336

R. Matthew Hamilton CFP® Hamilton Capital Management, Inc. (614) 273-1000

James M. Hamilton PDS Planning, Inc. (614) 481-8449 ext123

Robert Hamilton CFP® PDS Planning, Inc. (614) 481-8449

Michael A. Henn CFP® Swisher Financial Concepts, Inc (614) 595-4458

Adam T. Hill CFP® Maxwell Financial Management (614) 431-4345

Rita M. Itsell PDS Planning, Inc. (614) 481-8449

Scott Kidwell CFP® Budros, Ruhlin & Roe, Inc. (614) 481-6900

Katherine E. Kincaid CFP® Waller Financial Planning Group, Inc. (614) 457-7026

Michael Kline CFP® Budros, Ruhlin & Roe, Inc. (614) 481-6900

Gregory A. Koehler Raymond James Financial Services (614) 442-0214

Charlene C. Kott CFP® Asset Management/Raymond James Financial (614) 895-2990

Jessica A. Lee Budros, Ruhlin & Roe, Inc. (614) 481-6900

William A. Leuby JD,CPA,CFP® Hamilton Capital Managment, Inc (614) 273-1000

Robert A. Mauk CFP® Chornyak & Associates, Ltd. (614) 888-2121

Richard W. Maxwell CFP® Maxwell Financial Management (614) 431-4345

John McHugh CPA, CFP® Budros, Ruhlin & Roe, Inc. (614) 481-6900

Christopher O. Olsgard CFP® Waller Financial Planning Group, Inc. (614) 457-7026

Martina Peng Ph.D. Franklin University (614) 947-6174

Debbie J. Pottebaum CFP® Chornyak & Associates, Ltd. (614) 888-2121

Christina Povenmire CFP®, MBA Vawter Financial, Ltd. (614) 487-1244

Debbie Price J.D., CPA, CFP® Price Planning, LLC (614) 848-3860

Richard A. Ray MBA, CFP® Hamilton Capital Management, Inc. (614) 273-1000

Carol A. Friedhoff CFP®, MS Savvy Outcomes Inc. (614) 873-2874 Director, Public Relations

Tammi Gourley Diamond Hill Investments (614) 255-3349 Co-Director, Programs

Charles A. Kerwood, III CFP®,ChFC Lisa M. Jolley J.D. The Columbus Foundation Waller Financial Planning Group, Inc. (614) 457-7026 (614) 251-4000 x105

Jeffrey R. Loehnis CPA, CFP® Whitney T. Logan CFP®, CLU, ChFC Raymond James Financial Services Hamilton Capital (614) 442-0214 Management, Inc. (614) 273-1000

Andrew L. Michel CLU, ChFC Andrew Michel & Associates/ Lincoln Financial Advisors (614) 885-2853

Timothy K. Montgomery CFP® Timothy M. Montague CPA, Ameriprise Financial CFP®, MT (614) 310-0501 Hamilton Capital Management (614) 273-1000

Financial Planning Association of Central Ohio David Stone CFP® Personal Financial Advisors, Inc. (614) 837-7000 Co-Director, Partnerships

Daniel M. Lindelow CFP®, CPA ACT Financial Partners, LLC (614) 638-9913

Matthew J. Stewart CFP® Key Private Bank (614) 460-3453 Chairman

Larry R. Zapp CFP® Larry R. Zapp & Associates, Inc. (614) 478-0500 Treasurer Board member not pictured: Joseph Jankowski, CFP®, Co-Director, Programs


John M. Reymann CFP® Ameriprise Financial (614) 310-0501

John Roessler CFP® Budros & Ruhlin & Roe, Inc. (614) 481-6900

Beth K. Sparks CFP® Douglas C. Smith John E. Sestina CFP®, ChFC Raymond James & Associates Douglas C. Smith Company, LLC John E. Sestina and Company (614) 888-5235 (614) 885-1480 (614) 326-3077

Jeffrey Suchy CFP® Budros, Ruhlin & Roe, Inc. (614) 481-6900

Kristen J. Sydney CLU,ChFC,JD,CFP® Sagemark Consulting Private Wealth Services (614) 854-6680


Brian R. Titus Ameriprise Financial (614) 310-0501

Larry Waller CLU, ChFC, CFP® Waller Financial Planning Group, Inc. (614) 457-7026

Lisa S. Walls CFP® Hamilton Capital Management, Inc. (614) 273-1000

Amy Weldele CFP® Budros, Ruhlin & Roe, Inc. (614) 481-6900

Rebecca L. White CFP® Key Financial Services

John Timothy Young JD, CFP® Hamilton Capital Managment, Inc (614) 273-1000

Scott E. Rendle CFP® Waller Financial Planning Group, Inc. (614) 457-7026

The Financial Planning Association of Central Ohio serves and inspires those who deliver, support and need financial planning. 5

Protect investments through diversification I’ll bet you could easily break a wooden pencil in two. However, it would be more difficult to break a bundle of pencils. Imagine that lone pencil is the technology stock category. If you were invested entirely in technology stocks, the market snapped that lone pencil a while ago. But what if you added a government bond pencil, a money market pencil, a precious metal pencil, a value investment pencil, a municipal bond pencil, and a few consumer stock pencils? Your tech stock pencil might bend, or still even break, but the band of pencils as a whole would remain strong and unbroken. Safety (and strength) in numbers is the power of diversification. Diversification is the spreading of investment risk by putting assets in several investment categories — stocks, bonds, money market instruments, precious metals, and the spectrum of mutual funds. The 17,000 Enron employees who invested their 401(k)s heavily in company stock watched helplessly as their savings evaporated and the company collapsed into bankruptcy. They believed in their compa-

ny, in themselves, and in their company’s stock. Diversification protects you by spreading your risk among several categories of investments. Historically, when one group goes down, not all of them go down; some may even go up. You protect your savings; you protect yourself. If those Enron employees had diversified their 401(k)s more broadly, they might have lost only a portion of their retirement portfolio—instead of the whole thing. They could have maintained a foundation to continue building from. With recent economic conditions, diversification within your portfolio is very important. Historical trends are not necessarily repeating themselves. Work with an experienced financial professional to help you design your investment strategy to your needs and risk tolerance. Better safe than sorry. Gwen Gloeckner, CDFA Gloeckner Financial Group (614) 310-2400

‘It will never happen to me...’

Disability income insurance can protect your financial future “It will never happen to me.” In reality, however, disabilities can and do happen — to anyone — at any time. In fact, you’re three and a half times more likely to become disabled than you are to die prematurely1. What constitutes a disability? When you become too sick or hurt to work, you are disabled. Many disabilities are short-lived — a pulled muscle or a sprained ankle. These disabilities typically don’t interfere with your ability to continue working and providing for your family. But what if you suffered a heart attack? Or had a serious car accident and had to spend an extended period of time in a hospital (or worse yet, never fully recovered)? The financial implica-



tions of a disability can be disastrous. How would you make your house and car payments if you couldn’t work? Even if your employer offers a group plan, the benefit provided is often not enough. After taxes, most group plans only cover approximately 45 percent of your income. An individual disability policy can fill the gap. What to know when comparing individual disability income insurance policies: • Definition of disability. It’s in your best interest to avoid disability policies that have an “any occupation” definition. These types of policies pay only if you are unable to perform any occupation that reasonably fits. Instead, look for a policy that considers

you disabled if you cannot perform the duties of your regular occupation. • How long your disability benefits should last. This depends on your age, income and level of savings. Many people purchase coverage that lasts until age 65. • How long you can wait to receive benefits. If your income stopped today, how long could you continue to pay your bills on your own? The longer the elimination period, the less expensive your policy will be. 1 Health Industry Association of America, 2000 Michelle M. Merkel, CFP® Merkel Financial Services, Inc. (614) 481-4455 merkelfinancial@

To see opportunities, one Roth vs. Traditional IRAs: You need to decide in 2010 must choose to notice During the last 12 months of volatile markets, how did you react? Did you boldly face the economic times or did you quit opening your investment statements? How can you stay rational in uncertain times? How can you take control of your financial future? KNOW YOUR VITALS The makeup of your financial situation is unique to you. Don’t fall victim to the fear and panic of the masses. Take control by checking each aspect of your affairs carefully. Ask your advisors to pull together an analysis of your current financial circumstances: asset/liabilities, cash flow, investment performance, real estate holdings, business values, insurance coverage, etc. Reassess your plans and expectations. Are your intentions the same today and if not, what changes can or should be made? If you had planned to sell your business, should you proceed or wait a few more years? Should you adhere to your existing gifting schedule? Should investment allocations be changed in light of the volatility we’ve experienced? If you answer the questions above without knowing exactly where you stand and where you are headed, you’re not answering in context of your unique vantage point, vision and opportunities. CONTROL WHAT YOU CAN CONTROL Focus on the forest, not the trees. Instead of looking narrowly at your investments, pull back and make sure you have a

sound thorough financial plan. As simplistic as this sounds, most people focus on the parts and not how they work together. Your plan should drive any investment changes, not your emotions. Decisions made with limited consideration can have unexpected consequences in other areas. ENSURE YOUR STRATEGIC ADVISORS KNOW YOUR VISION To advise you well — both in the best of times and through rough waters — your key advisors need to know your long range vision. Now, more than ever, this vision should dictate your decision making. In short, this is a crucial time to become fully engaged in your financial situation. I’m not suggesting that you watch the markets daily. I am suggesting that you open the proverbial envelopes, be informed, and make educated decisions. It is true that in the middle of every challenge is opportunity. However, to see these opportunities, one must choose to notice.

Diane E. Armstrong, CFP®, CPA WealthStone (614) 267-2600 darmstrong@

Generally, contributions to traditional IRAs are tax deductible. However, once you withdraw from a traditional IRA, it is taken as taxable income. Roth IRA contributions, on the other hand are not deductible. In other words, when you contribute to a Roth, you pay taxes on that money immediately. The benefit, however, is that money can grow indefinitely and when withdrawn, you won’t pay taxes. Roth IRAs are more beneficial as: • Your future tax rate increases • Your length of time until you withdraw increases Regular IRAs are more beneficial as: • Your current tax rate decreases • Your expectation of “game changing” events is lower. In addition, Roth IRAs do not have the required minimum distributions that Traditional IRAs do and enjoy more liberal withdrawal rules.

$100,000 for couples filing jointly. In 2010 only, this restriction will be lifted In addition, taxes due on the amounts converted can be spread over 2011 and 2012 — effectively reducing your tax rate. While limitations on conversions are lifted for 2010, the limitation on contributions to IRAs has not been waived.

WHY 2010? Conversions from Traditional IRAs to Roth IRAs has been limited if your modified adjusted gross income has been above

Clint Edgington, CFA Beacon Hill Investment Advisory 888-614-4625

RULES OF THUMB • If you believe your tax rates will drop during the withdrawal period, it likely does not make sense. • If you believe your tax rate will increase, it likely does make sense. • If you do not have cash to comfortably pay the taxes due, it likely does not make sense. • If you do not have a long time horizon (5 to 10 years) for the tax-free compounding to occur, it likely does not make sense.

Pamela Birkenholz, CRPC Financial Advisor Personal Financial Planning ● Retirement Planning ● Mutual Fund Investments ● Education Funding ●


Investment Services Personal Planning Services Business Consulting Services Insurance Services Tax Services 




WealthStone 5000 Horizons Drive Columbus, Ohio 43220 Telephone 614-267-2600 Visit us at

555 Metro Place North Suite 475 Dublin, Ohio 43017 614-799-0373

Waddell & Reed, Inc.

Member SIPC



Selling your C-corporation business When is the right time?

As a financial planner who helps business owners plan for their retirement, the topic of how and when to sell the business usually comes up early in the conversation — especially since most business owners have a good majority of their net worth tied up in their businesses. An owner selling a C-corporation that she has owned for more than five years (some exclusion apply) may be able to exclude a significant percentage of capital gains from taxation by taking advantage of IRC Section 1202 — Qualified Small Business Stock. Section 1202 basically states that if a C-corporation is a “qualified small business” (as defined within the code), then the owner may exclude from gross income 50 percent of any gain from the sale or exchange of

the qualified small business stock (up to $10,000,000 of gain). This deal is sweetened for those selling their business in the years 2009 and 2010 due to the American Recovery and Reinvestment Act of 2009, which allows the taxpayer to exclude 75 percent of the gain. (Consult with a CPA for the many details of this part of the tax code!) Due to this preferential tax treatment, it may behoove those nearing retirement to sell their businesses before the end of the year 2010. However, there surely are many other factors (other than taxes) that one needs to take into consideration when a decision of this magnitude is being weighed. Having a team of professional, trusted advisors is critical when it comes to

this, and other, decisions that face business owners on a regular basis. Members of such a team might include an attorney, a CPA, a banker, a business valuation analyst, a business broker, and a CERTIFIED FINANCIAL PLANNERTM professional that specializes in working with business owners. In addition to providing advice on topics such as estate and retirement planning, a CFP® practitioner can act as the “quarterback” and coordinate the efforts of the entire team. This could save you time and money — things that you’ll hopefully have a lot of once you’ve retired. Matthew J. Stewart, CFP® Key Private Bank (614) 460-3453 matthew_j_

Investing for 2009 and beyond 10 to 15 years, then applied liberally if you are risk-tolerant. Be sure to assign a specific percentage to each asset class and then to each category. This will help rebalance in step 3 below.

While the title of this article implies that good investing strategies may have changed as a result of the recent extreme market turbulence; in fact, the key steps of investing remain unchanged. STEP 1: HAVE A PLAN You wouldn’t build a house without a blueprint, so be sure to have a “blueprint” for what may be your largest asset. Investment advisors refer to this as the asset allocation. Research has shown that the biggest predictor of investment returns is your choice of asset classes and categories — NOT the individual securities you choose. Your asset allocation doesn’t need to be complex to be effective. The


STEP 2: SELECT YOUR INVESTMENTS Because most academic research shows that few, if any, money managers can outperform the market, you should look for low-cost, well diversified mutual funds, exchange-traded funds (ETFs) or index funds.

most important decision is your ratio of cash/bonds to stocks. First, think about your time horizon and risk tolerance. Typically, the shorter your time horizon,

the more conservative your investments should be. The three categories of investments are, in order of risk: cash, bonds, and stocks. If your time horizon is five

years or less, your portfolio should be heavily skewed toward cash-like securities and, perhaps, bonds. Stocks shouldn’t be added until your time horizon is longer,


STEP 3: REBALANCE PERIODICALLY Every 12 to 18 months you should revisit your original asset allocation. Some categories will have grown larger than what you

originally allocated, while others will be less. If bonds now make up 30 percent of your portfolio while the original allocation was 20 percent and stocks are down to 70 percent from 80 percent, then you should sell 10 percent of the bonds and invest those funds back into stocks. Rebalancing helps to reduce risk and to force investors to sell high and buy low; the ultimate goal of every investor. Need more information? is a great educational resource. Christina Povenmire, CFP®, MBA Vawter Financial, Ltd. (614) 487-1244 cpovenmire1@

Financial Planning Week 2009  

Financial Planning Week, October 5-11 2009