Wealth Protection

Fear of The Inevitable Keeps some from important financial planning

Family firm helps other families create sound financial plans for the future.

In the complicated world of financial wealth management, one thing that top advisors agree on is that failing to prepare for retirement, and for the possible sudden loss of a loved one, is actually preparing to fail.

If that’s the case, then many people won’t make the grade during retirement, setting their families adrift in a monetary quagmire, and ultimately leaving them to deal with the serious financial and legal dilemmas after they die.

“We’re all going to die someday, some of us can accept that, some of us can’t,” said Bernard M. Kiely CPA, the president and chief compliance officer of Kiely Capital Management, Inc. “I told a group of senior citizens once, ‘If you have life insurance, that doesn’t accelerate the process [of death]. If you have a will, that doesn’t accelerate the process.’”

Fear of the inevitable appears to be widespread. Most Americans – 55 percent, according to LexisNexis, a leading global provider of legal, regulatory and business information – do not have a will. Among minorities, the numbers are even worse, with 68 percent of African-American adults and 74 percent of Hispanic adults reporting that they don’t have a will. Moreover, the report states that men still routinely handle family finances, and that their widows are left to pick up the pieces after a sudden death and many don’t know how or where to begin.

Kiely Capital Management, based in Morristown, New Jersey, is a family-run wealth management firm that primarily serves clients “at the end of the accumulation stage,” Kiely said. Typically, clients seek their services within five years of their retirement. Kiely’s wife, Yvonne, manages the firm’s day-to-day investment and reporting processes, and the couple’s daughter recently joined the family business. Together, they’re moving forward with a strategy to target “emerging families” and younger investors, Kiely told “The Suit” in a recent interview.

While Kiely has worked with retirees since 1983, Yvonne joined the firm as a business partner in 1992 and assisted many widows who lost their husbands in the 9/11 terrorist attacks on a pro bono basis.

In a 2006 interview with business journalist, Maria Bartiromo, then at the “Wall Street Journal Report,” Kiely described how widows often lacked even basic knowledge of their husbands’ finances, and how difficult sorting out a sudden death without a will or pre-preparation can be.

“Everybody who is on their own should have a will … The will should state who is going to be their representative after they pass away,” Kiely told Bartiromo.

Kiely Capital Management, is a fiduciary firm, meaning they put client interests first and are compensated on a fee-only basis. Currently, they assist some 100 families with their taxes and retirement. The firm requires a minimum $500,000 to invest, although Kiely reserves the right to waive that on a case-by-case basis. While increased outreach to younger investors will not reduce the established minimum, Kiely said, it did prompt him to specify in writing that the requirement can be waived.

The Department of Labor’s (DOL) new fiduciary rule – which will force all financial services professionals, including insurance agents and stockbrokers to put client interests before their own – will not affect how Kiely does business since his firm has always acted in clients’ best interests. The new rule was set to go into effect last April but was delayed by the Trump Administration who wanted the regulation reassessed. Parts of the rule went into effect June 9 after the DOL determined that further delay could not be justified. The rule, however, will not be fully implemented until January 1, 2018. Kiely said the new rule could impose additional compliance costs on his firm, but that he will not change how he handles clients.

“Stockbrokers are the ones who are going to have a problem with the fiduciary rule because they have to change their mindset,” Kiely said.

Few investors even know whether their advisor follows a fiduciary standard or not, Kiely said. Most clients are referred to Kiely through word-of-mouth, and many prospective clients assess advisors based on reputation or “personal likability,” with only about “half” knowing what a fiduciary is, he added.

The data reinforces Kiely’s claim. A CNBC report from June 2015 drew on several studies and found that most investors don’t know whether their advisor is a fiduciary or not. Further, a majority of investors cannot explain what a fiduciary is, or the benefits of having a fiduciary advisor. Those investors, however, can say whether they “trust” their advisor, and that factor seems to be key in deciding which wealth manager to choose, the report stated.

Putting clients’ interests first often means saying “No,” Kiely said. “If someone has outrageous ideas about what investment returns are going to be … I tell them, ‘This isn’t going to work,’” he said, referring to prospective investors who want get-rich-quick answers and market-beating returns on demand. “There are people out there looking for someone to hit it out of the park, I tell them I don’t do that, there’s only one guy I know who can do that, his name is Bernie Madoff.”

Kiely instead looks to hit “singles” and “doubles,” and to build suitable portfolios for clients based on their financial goals because there is no magic pill or silver bullet to investing. Many investors struggle with bad habits, such as panicking during market downturns, and that can damage portfolios and retirement funds. He cautions clients to take corrections slowly and to make decisions deliberately.

“History has shown that trying to dodge the bullet never works. If a correction comes, we roll with it … We’re going to hunker down and we will come out the other side in good shape,” said Kiely.

Kiely’s work has been recognized by numerous financial publications and organizations. Most recently, he received the National Association of Personal Financial Advisors’ 2017 Robert J. Underwood Distinguished Service award. He has also been named as one of the best financial advisors in the country four years in a row by “Worth Magazine;” and “New Jersey Monthly Magazine” has listed him as a “New Jersey Five Star Wealth Manager” every year since 2011. Kiely has been profiled by “Investment Advisor Magazine” and “NAPFA Advisor,” and “Accounting Today” twice-listed him as one of the best CPAs in financial planning sector.

Kiely took a winding road on his career journey to financial planning. He entered the U.S. Navy as a young age, where he served as a boilerman. He transited the Panama Canal four times and served two tours in Vietnam. Post-Navy, he worked to support himself during the day while he studied for a bachelor’s degree in accounting and, later, an MBA – it would take him 10 years to finish both. Kiely entered the corporate world after graduating, but he found he “wasn’t cut out for it,” he said, so he left it behind to establish Kiely Capital Management in 1983 and never looked back.

More than 30 years later, Kiely’s firm is expanding to capture more millennial investors and new families. Although some industry observers have noted that the up-and-coming generation prioritizes online tools and solutions – with many fearing that the so-called robo-advisors will cut into the traditional advising market – Kiely said he does not believe he has anything to fear from automated tools. He noted that TurboTax, the online tax preparation software, did not kill his tax return business because many clients simply do not want to do their own taxes and would rather leave them to a professional. And he added that every financial innovation – be it robo-advisors or something else – spurs a rush by the business press to declare firms like his a thing of the past. And they are always wrong.

“For 20 years the trade press has said that small firms like mine are going to go out of business, it hasn’t happened,” he said.

For more information see www.kielycapital.com


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