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    Dr. Marcinko is originally from Loyola University MD, Temple University in Philadelphia and the Milton S. Hershey Medical Center in PA; as well as Oglethorpe University and Emory University in Georgia, the Atlanta Hospital & Medical Center; Kellogg-Keller Graduate School of Business and Management in Chicago, and the Aachen City University Hospital, Koln-Germany. He became one of the most innovative global thought leaders in medical business entrepreneurship today by leveraging and adding value with strategies to grow revenues and EBITDA while reducing non-essential expenditures and improving dated operational in-efficiencies.

    Professor David Marcinko was a board certified surgical fellow, hospital medical staff President, public and population health advocate, and Chief Executive & Education Officer with more than 425 published papers; 5,150 op-ed pieces and over 135+ domestic / international presentations to his credit; including the top ten [10] biggest drug, DME and pharmaceutical companies and financial services firms in the nation. He is also a best-selling Amazon author with 30 published academic text books in four languages [National Institute of Health, Library of Congress and Library of Medicine].

    Dr. David E. Marcinko is past Editor-in-Chief of the prestigious “Journal of Health Care Finance”, and a former Certified Financial Planner® who was named “Health Economist of the Year” in 2010. He is a Federal and State court approved expert witness featured in hundreds of peer reviewed medical, business, economics trade journals and publications [AMA, ADA, APMA, AAOS, Physicians Practice, Investment Advisor, Physician’s Money Digest and MD News] etc.

    Later, Dr. Marcinko was a vital and recruited BOD  member of several innovative companies like Physicians Nexus, First Global Financial Advisors and the Physician Services Group Inc; as well as mentor and coach for Deloitte-Touche and other start-up firms in Silicon Valley, CA.

    As a state licensed life, P&C and health insurance agent; and dual SEC registered investment advisor and representative, Marcinko was Founding Dean of the fiduciary and niche focused CERTIFIED MEDICAL PLANNER® chartered professional designation education program; as well as Chief Editor of the three print format HEALTH DICTIONARY SERIES® and online Wiki Project.

    Dr. David E. Marcinko’s professional memberships included: ASHE, AHIMA, ACHE, ACME, ACPE, MGMA, FMMA, FPA and HIMSS. He was a MSFT Beta tester, Google Scholar, “H” Index favorite and one of LinkedIn’s “Top Cited Voices”.

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HOW THE “FIDUCIARY CONUNDRUM” DEFIES PHYSICS?

And … How We Can Fix It

By Dr. David Edward Marcinko MBA MEd CMP®

www.CertifiedMedicalPlanner.org

The Rules As I Understand Them

Securities industry Regulations and Regulators recognize that (registered) investment advisors give advice, while stock brokers sell brokerage products. Thus, the Series 65 license is required to become a financial advisor, while Series 7 licensed stock-brokers are not (and cannot) be fiduciary advisors.

So, advice is subject to a fiduciary duty, while product sales (brokerage) activity is not. The ratio of fiduciary advice to brokerage sales is about 1:99. So, what does that tell you?

A Contentious and Complicated Issue

This issue is so contentious and complicated today that lawyers are needed to define each and every term, engagement, transaction, brokerage or advisory contract, etc. It is far too amazingly contorted and complicated for most; including me; and we have even discussed the industry machinations and political double-talk on this ME-P previously; from some vary sharp industry experts, too.

The Fiduciary Conundrum

The “work-around” for these rules is industry “dual-registration”. Simply put, just get licensed to do both; as I did. Charge a commission when selling stuff and charge a fee for advice. And ideally, do both at the same time; while getting paid for both sides.

As a naïve luddite, I learned this little truism in financial planning school decades ago, and as a doctor and fiduciary for my patients at all times, almost vomited.

Of course, there were more sophisticated students in our classes who regurgitated the standard industry opinion: “We’ll give the client a financial plan for free IF we can sell commissioned products.”

Ideally this meant a fat and fully commissioned wrap account, whole-life insurance policy, LTCI policy; etc. Or, sell products and collect fat ongoing, and often unrecognizable AUM fees [fee-only], too!

From the stock broker-advisor’s POV, it was “Heads I win – tails you loose” for the client. Now, you know why I am a former or reformed certified financial planner.

The Physics Split

Know that as a pre-medical college student years earlier, I leaned about the Werner Heisenberg Uncertainty Principle, in physics class.

Of course,  true Advice – is not Sales …  and Sales is not Advice. Both should never be; simultaneously. So, let’s ditch dual registration and decide which to pursue … and then proceed accordingly. Both sales and advice have risks and benefits to client and producer; both have advantages and disadvantages to both; as well.

WHY? Just like the Werner Heisenberg Uncertainty Principle; it shouldn’t [shan’t] be both; at once.

NOTE: In quantum mechanics, the Heisenberg uncertainty principle is any of a variety of mathematical inequalities asserting a fundamental limit to the precision with which certain pairs of physical properties of a particle, known as complementary variables, such as position x and momentum p, can be known simultaneously.

So, in physics, I can tell you where you are -OR- how fast you are going; but not both. Thus, if it is product sales; it is not advice.

Today, since “dual registration” is still allowed, my suggestion to clients is to seek a fiduciary in all matters 24/7/354; get it in writing, and try  to avoid arbitration and “best interest” or BICE clauses! Run from [fee-based and fee-only] AUM fees, too.

PS: I am not against Series #7 representatives and product sales. Salesmen/women often provide a valuable service and should be appropriately compensated. I only object when fees, costs, charges and commissions are duplicative, excessive and/or not fully disclosed to the client. Since excessive is an arbitrary term; full disclosure is the key ingredient.

Assessment

So – How am I wrong, mistaken and/or what did I miss? Do tell! Should We – Can We – Ditch Dual Registration [DDR]?

Oh! In the future, I also hope that State fiduciary standards will potentially cover both non-ERISA and ERISA situations, and employee plan participants will have access to full discovery rights, the one thing the industry fears most.

But, that’s a discussion for another day and time.

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. https://medicalexecutivepost.com/dr-david-marcinkos-bookings/

Contact: MarcinkoAdvisors@msn.com

BOOKS

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Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

https://www.crcpress.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283

***

Do Commisson-Based Fiduciary Financial Advisors EVEN Exist?

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Sometimes the Case?

By Rick Kahler MS CFP http://www.KahlerFinancial.com

Rick Kahler MS CFPCan a financial advisor represent your best interests and still earn a commission? Surprisingly, this can sometimes be the case.

But … It’s up to you to find out.

Fiduciary

Being required to put the consumer’s interest first, which means representing a client rather than selling products and services to a customer is called having a fiduciary duty. While fee-only planners are inherently fiduciaries, they don’t exclusively own the fiduciary domain. The definition of a fiduciary duty does not inherently ban receiving commissions. Numerous statutes and applications of common law can require someone receiving a commission from selling a financial product to act in a fiduciary capacity.

One such circumstance was discussed in a blog post at http://www.kitces.com by Duane Thompson, president of Potomac Strategies, LLC, a legislative and public relations consulting firm.

Registered Investment Advisor

Those registered with the SEC as Registered Investment Advisors (RIA) under the Investment Advisers Act of 1940 are required to uphold a fiduciary standard of care. Advisors must register as RIAs if they, “for compensation, engage in the business of advising others” about investing in securities and as a central part of the business.

The 1940 Act has almost nothing to say about linking compensation to fiduciary responsibility. While large firms selling financial products can argue whether they must register as RIAs, it is clear that anyone registered as an RIA is held to a fiduciary standard, regardless of their compensation structure.

That said, the chances are an advisor who is compensated 100% by commissions is not an RIA and not held to a fiduciary standard. Of the 11,475 adviser firms registered with the SEC, only four are commission only, according to Thompson. Of the remainder, those that receive  a commission also charge some type of fee.

The Odds

The overwhelming odds are that, if you don’t pay a fee to a company giving investment advice or selling a financial product, they are not legally required to look after your best interests.

Even though an RIA who is totally or in part compensated by commissions has a legal obligation to put your interests first, they may still have a conflict of interest, which the SEC requires them to disclose. The size of that conflict of interest depends on the percentage of an adviser’s revenue derived from selling financial products.

Example:

For example, a RIA receiving 90% of their revenue from the sale of financial products has a large conflict of interest. The sustainability of the company and advisers’ careers depends upon sales. Arguably it’s going to be very difficult for an adviser to remain unbiased, especially if what may be in the client’s best interest is a no-load, low cost index mutual fund or variable annuity; which pay no commission.

Conversely, an advisor receiving 99% of their revenue from fees and 1% from commissions on the sale of low-cost term life insurance has almost no conflict. The sale of the insurance is most likely a convenience for clients and has an insignificant financial impact to the adviser.

face-off

[Fiduciary Advisor versus Sales Man/Woman] 

In order to find out the likelihood of advisers upholding a fiduciary standard, first ask whether they are a RIA with the SEC. If not, they owe you no fiduciary responsibility. You are a customer.

Assessment

If an adviser is an RIA, however, don’t assume there is no conflict of interest that may taint the fiduciary relationship. Ask how much of the firm’s gross revenue comes from commissions on the sale of financial products and how much comes from fees paid directly by clients. The higher the percentage of revenue that comes from fees, the lower the conflict of interest and the greater the chance you will receive unbiased, client-centered advice.

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Are “Financial Advisors” True Professionals or Employed Sales Representatives for Retail Products?

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White House Sides With Sales Reps On Overtime

Dr. David Edward Marcinko MBA CMP™

[ME-P Editor-in-Chief]

www.CertifiedMedicalPlanner.org

As the US Supreme Court is preparing to review the contentious debate about overtime pay for sales reps, the US Solicitor General has filed an amicus curaie, or friend of the court brief, and sided with pharma reps. The move is not surprising, given that the US Department of Labor has, several times, taken a similar step in federal courts around the country where cases were heard.

Far Reaching Implications?

The review is expected to have far-reaching implications for the pharmaceutical industry, and I believe the financial services industry, as well. Why?

Both sectors have been fighting a growing number of cases nationwide over the past several years, but has had mixed results as the issue has continually divided the courts. At the same time, drug makers, Wall Street and broker-dealers have been laying off thousands of sales reps – “financial advisors”, “wealth managers” and stock brokers – as they try to cut costs and alter their business models to prepare for some level of fiduciary accountability.

The Issue

At issue is whether drug reps, and FAs by extension, are exempt from overtime provisions of the Fair Labor Standards Act. The FLSA overtime compensation requirement does not apply to employees who work as outside salespeople, but the law does require employers to pay overtime for hours worked beyond 40 hours a week, unless a FLSA exemption applies.

Link: http://www.pharmalot.com/2012/02/white-house-sides-with-sales-reps-on-overtime/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Pharmalot+%28Pharmalot%29

My Issue

And so, does this mean that most “financial advisors” are really stock-brokers and product pushers after all? At least in medicine, we doctors know what a pharmaceutical rep is – and we understand his/ her roll is to push pharma products, DME and drug sales.

Shouldn’t a salesman – be a salesman – and an “advisor” – be an RIA or RIA rep? I don’t often agree with the White House, but I do on this one.

FAs can’t be independent client advocates – and employees – at the same time

Now, isn’t it time for the public to know that the vast majority of FAs are just salesmen [still SBs], too? Just selling retail financial products to doctors and others; not drugs. After all, FAs can’t be independent client advocates – and employees – at the same time.  And, it appears with this potential filing and ruling; that they truly wish to be the later. Now FAs, admit it!

Assessment

Why do you think FAs are licensed as “registered representatives”? Rarely; a fiduciary among them!

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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How to Become A Financial Advisor [Learned Profession or Professional Sales Force?]

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A Recent E-mail that I Received

By Dr. David Edward Marcinko MBA, CMP™

www.CertifiedMedicalPlanner.com

[Editor-in-Chief]

As a former certified financial planner for almost 15 years, I was surprised to recently receive the following unedited e-mail correspondence.

Dear Marcinko,

If you are clever, have a way with people, or are a born salesperson, then becoming financial advisor could be your ticket to paradise.

Maybe not exactly paradise, but you could definitely have a ticket to a rewarding career. If you’re thinking about starting out as a new financial advisor – you may already be half the way there.

Why?

Because it’s an occupation where your life challenges will give you the understanding and empathy needed to work with your clients. Have you ever been in the position where you had to figure out a budget for your children’s education? Or manage an over extended credit card? These life situations will aid an individual on the path to become a financial consultant.

Requirements to Be a Financial Advisor

Even though a formal education is not a necessity to become financial adviser, it helps if you’ve taken certain courses.

What degree do you need to become a financial advisor? A bachelor’s degree in Finance, Economics, Accounting, Commerce, Business or Marketing would be a good start. A degree won’t assure you of a startling career but it may help get your foot in the door.

Rumor has it that a degree in psychology is also an asset as financial advising is as much about counseling as it is about advising. There are a plethora of people with all sorts of emotional entanglements around their financial lives.

Licenses

So, what licenses do you need to be a financial advisor? Some companies will assist a newbie in the financial advisory business and place them into a special program that will help them to obtain the required regulatory licenses such as a Series 66, this license permits them to vend annuities and mutual funds. It’s also possible to manage your own training. You can take part-time courses in order to qualify for the CFP (Certified Financial Planner) exam.

There are roughly over 286 universities and colleges that will assist you in preparing for the CFP exam. How long does it take to become a financial advisor? In order to qualify for the exam you will also need three years full-time working experience with a financial planning establishment.

Statistics state that over 40% regularly fail this all important exam. Its worth the time and effort as with this certification you are deemed as a certified financial planner and demand a higher salary.

Assessment

Hot tip: Stay away from insurance companies for financial employment. They’ll insist that you sign everyone including the dog and your grandmother. Then get rid of you if you don’t procure sufficient business. Banks are better they will bring in the clients for you.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Are financial advisors true professionals; or a truely professional sales force?

Please review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure. Are financial advisors true professionals, or a professional sales force?

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The One-Woman Physician Investors Should Not Trust

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Why We Should “Run” from the SEC’s Mary Schapiro

By Dr. David Edward Marcinko MBA CMP™

[Publisher-in-Chief]

OK, I’ve opined about fiduciary accountability for stock brokers, FAs and FPs – as well as Mary Schapiro [Chairman of the SEC] before – on this ME-P. And usually, in not so glowing terms!

But now, Mary really chaps my ethical and linguistic sensibilities.

Why I’m So P…… Off!

According to Bloomberg, and Advisor One [a financial services industry trade magazine], the chairwoman is considering something called the “business model neutral” rule that retains proprietary financial products, and brokerage sales commissions.

This concept of ‘business neutral’ is the one sought by many in the brokerage and insurance industry in order to redefine the term ‘fiduciary’ as an enhanced form of ‘suitability’ with opt-out provisions.

But, it is not sought by me, and should not be accepted by physicians.

Definitions

Suitability Rule – According to the Free Dictionary:

A stated or implied requirement by a regulatory body that a broker or investment adviser must reasonably believe that a certain investment decision will benefit a client before making a recommendation to him/her. That is, the broker or investment adviser must act in good faith, and may not knowingly recommend bad investments. Different regulators and self-regulating organizations incorporate suitable rules in different places in their bylaws. Two commonly referenced suitability rules are Rule 2310 for the Financial Industry Regulatory Authority and Rule 405 for the NYSE. See also: Due diligence, Prudent-person rule, Twisting.

Fiduciary Rule – According to the Free Dictionary:

A uniform standard for financial advisors that requires them to put retail customer interests ahead of their own financial interests.

This is clearly a higher duty [level of care] than suitability. Insurance agents, stock brokers, BDs and most “financial advisors” hate it.

Link: http://www.advisorone.com/2011/12/09/reaction-to-schapiro-comments-on-fiduciary-rule-ar?ref=hp

“Suitability on Steroids”

Some pundits suggest we think of this new “business model neutral” rule as “suitability on steroids.”

However, as most of us in medicine know, steroids are not a panacea and are typically used as a quick fix for short term gain, only.

Otherwise, the excessive use of anabolic steroids is bad for our physical health. Just like Mary Schapiro is bad for our fiscal health. But, a Certified Medical Planner™ is a fiduciary at all times http://www.CertifiedMedicalPlanner.org

More: Enter the CMPs

Assessment       

And so, your thoughts and comments on this ME-P are appreciated. I was an insurance agent and certified financial planner for almost 15 years [Series 7, 63 and 65] before I resigned all – in disgust over the fiduciary flap.

Doctors are fiduciaries. I am a fiduciary, a doctor, and a financial advisor. Shouldn’t all physician-investors demand same from their own financial advisors [NASD-FINRA, RIAs, RIA-Reps]?

But hey – I’m just a medical provider.

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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[BY DOCTORS – FOR DOCTORS – PEER REVIEWED – NICHE FOCUSED]

***

What is the Role of a Physician-Focused Financial Advisor?

Changing Times – Demand Changing Roles

By Dr. David Edward Marcinko MBA, CMP™

Editor-in-Chief

www.HealthcareFinancials.com

As a financial advisor for more than 15 years, it has been my experience that many doctors who require assistance in developing a comprehensive personal financial plan also need help with implementing any investment planning recommendations. While perhaps not so true before the “flash-crash” of 2008-09, the issue seems especially true today as retirement portfolios have been decimated, and the specter of healthcare reform is no longer just a threat but a political reality. The mindset of hubris has been replaced by a tone of fear in many medical colleagues.

The Financial Advisors

Physician investors who develop an investment plan may use a competent financial advisor [FA] or other specialist in the investment area. A financial advisor can help clients understand their current financial situations and develop strategies for achieving their goals. Other FAs are specialists that help clients design and implement plans for investing. Still others use a more comprehensive approach to the entire financial planning process with extreme degrees of healthcare specificity

www.CertifiedMedicalPlanner.com

These Certified Medical Planners™ are fiduciaries at all times and put client needs first as registered investment advisors [RIAs], not commissioned sales agents or mere stock-brokers despite often confusing monikers.

Implementation

Implementation may be accomplished using professionally managed portfolios and mutual funds. The following shows how a plan may be implemented with an advisor assisting the physician-investor. The process may include:

• Developing investment policy and strategies

• Selecting and implementing managed portfolios and mutual funds

• Evaluating performance on a periodic basis

• Periodically reviewing and adjusting the investment plan as required

Note: The advisor may provide all of the investment services, or the physician investor may use other advisors in the process.

Example: 

A financial planner has developed a number of financial planning recommendations for a client. One recommendation is to develop a written investment plan, review current investments, and implement changes. The planner has recommended an investment advisor experienced in selecting and monitoring managed portfolios and mutual funds. The financial planner will meet with the client and advisor initially and once each year to monitor the plan.

Example: 

A financial planner has developed a financial plan for a client. The financial planner specializes in developing investment policy but not in implementing investments. The financial planner will use asset allocation software and develop a written long-term plan for the client. The doctor-client will work with a major brokerage firm to implement the plan using managed portfolios and mutual funds. The financial planner will monitor the brokerage firm and help the client evaluate performance.

Example:

A financial planner has developed a financial plan for a physician-client and will assist the client in developing asset allocation strategies. The planner has extensive knowledge in implementing the asset allocation strategies using managed portfolios and mutual funds. The planner will select and monitor the choices. The planner will provide the client with a quarterly performance report and meet with the client every six months to review the plan and strategies.

Assessment

Understanding the above is more critical than ever as physician-income continues to shrink going forward in the era of healthcare reform.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Do you seek professional assistance with your investing needs, or do you go-it-alone; why or why not? Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com and http://www.springerpub.com/Search/marcinko

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Calling All Financial Advisors, Brokers, EAs, CFPs, CPAs, CFAs and RIAs to Contribute

Contribute Your Insights to the ME-P

By Ann Miller RN MHA

[Executive-Director]

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You are cordially invited to contribute to the ME-P; one of the nation’s fastest growing professional networks for financial advisors, accountants, stock brokers, RIAs and their physician and medical professional clients.

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Original posts or comments are encouraged.

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Assessment

So, send in your original posts or comments, today!

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On American Health Care and Financial Services Competitiveness

A MEMORIAL DAY OPINION – EDITORIAL

[Innovation – Not Nationalization – Can Again Lead]

By Dr. David Edward Marcinko; FACFAS, MBA, CPHQ, CMP™

[Publisher-in-Chief]

By Hope Rachel Hetico; RN, MHA, CPHQ, CMP™

[Managing Editor]

Ann Miller; RN, MHA

[Executive-Director]

American Flag

On this 2010 Memorial Day weekend, please allow us to directly reflect for a moment on the decline of the healthcare, banking and financial services industry in America. And; then somewhat indirectly comment on the hopeful emergence of the web 2.0 phenomena of which we all are a part. The competitive applicability to these sectors should be appreciated by the insightful ME-P reader.

Collapse of Command and Control Monopolies and Oligarchies   

Old monopolies everywhere are crumbling because of tougher new competitors and the transparency wrought by electronic connectedness. For example, our old newspaper has to compete with the internet, your electric utility company battles low-cost local start-ups, telephone companies must begin installing fiber optic lines to fend off cable companies; and RIAs and fiduciary focused financial advisors [FAs] will supplant BDs and stock brokers in the financial services sector.

www.CertifiedMedicalPlanner.com

cmp-logo

The airline industry collapsed a few years ago, the banking industry has just collapsed, and the auto industry is recovering as we pen this post. [We have a particular affinity for the auto sector however, as the son of a UAW member and step-daughter of Michiganders]. Regardless, the rush to more intense competition cannot be stopped. As a doctor, FA or other business competitor; you either keep pace or get crushed by quasi-oligarchic organizations like the American Medical Association [AMA], American Podiatric Medical Association [FPMA], American Dental Association [ADA], American Osteopathic Medical Association AOMA], Financial Planning Association [FPA], Certified Financial Planner Board of Standards [CFP BoS], College for Financial Planning [CFP] or the National Association of Personal Financial Advisors [NAPFA], etc. What have they, and Wall Street, done for you … lately? Scandal, taint, doubt, lost-credibility, a business-as-usual ennui, lethargy and ruin! Enter www.Sermo.com

Link: https://healthcarefinancials.wordpress.com/2009/04/19/calling-for-cfp%c2%ae-fiduciary-status-real-education-and-higher-duty/#comment-4136

Health Insurance Companies

In the last-generation of health insurance companies and related fraternal medical organizations, patients exercised great control over physician selection, had quicker access to specialists and encountered fewer restrictions on care. The reverse was true with financial services. But, because of advancing technology, aging demographics, intense R&D, global manufacturing, and escalating domestic HR costs – competitive market forces against traditional and structured staff model managed care companies – many industry analysts [like us] predicted growth would decline [Yes, greed was also involved as healthcare was presumed a recession-proof sector; and didn’t we all own behemoth big-pharma and HMO stocks in our 401-K, and 403-B plans]? But now, many former stock-brokers and FAs are going rogue; er – independent!

“Although inefficiencies in any business often open up in the short term, and can be greatly exploited by creative and visionary entrepreneurs – as in most business structures – market forces will prevail in the long run”.

Leo F. Mullin, MBA

[Former CEO – Delta Airlines]Shadows

Next-Gen with “Fly”

Fortunately, a new generation of enlightened physician and FA entrepreneurs is coming “out-of-the-shadows” as new-wave web 2.0 corporations and RIAs are becoming more flexible, competitive and market responsive. Simultaneously, monolithic and collectivist political ideas keep trying to regulate the medical and financial services workplace with rules, regulations and contracts to control entire populations. Yet, in the new healthcare economy, this new generation of doctors and FAs with “fly,” is headed toward more competition; not less – with more collaboration with patients and clients – regaining self autonomy.

Physician and FA Advocates

Meanwhile, as medical professionals, FAs and patient advocates, we must all choose between staying flexible to ride out tough times – or – adopting a hard, brittle line that will crack under the pressure of competition. We know where we stand at the ME-P, do you?

Flexibility and Virtual Reality

In recent years, many large corporations and top-down business models were not market responsive and change was not inherent in their DNA. These traditional organizations represented a rigid or “used-to-be” mentality, not a flexible or “wanna-be” mindset; according to business columnist Alan Webber. Some financial advisory corporations, and today’s emerging health 2.0 initiatives, may possess the market nimbleness that cannot be recreated in a controlled or collectivist [nationalistic] environment. And so, going forward, it is not difficult to imagine the following new rules for the new financial and virtual medical ecosystem.

[A] Rule No. 1

Forget about “SEC suitability and FINRA rules”, large office suites, surgery centers, fancy equipment, larger hospitals and the bricks and mortar that comprised traditional medical practices or financial product delivery systems. One doctor or niche focused FA with a great idea, good bedside manners or competitive advantage, can outfox a slew of public servants, the AMA, SEC, ADA or FINRA “faux copy-cat examiners”, while still serving the public – and patients – and making money. It’s now a unit-of-one economy where “Me Inc.”, is the standard. Physicians and FAs must maneuver for advantages that boost their standing and credibility among patients, peers, payers, customers and clients. Examples include patient satisfaction surveys; outcomes research analysis, evidence-based-medicine, physician economics credentialing and true integrated fiduciary-focused financial planning.

However, we should also realize the power of networking, vertical integration and the establishment of virtual RIAs or medical practices, which come together to treat a patient, or help a client, and then disband when a successful outcome is achieved. Job security is earned with more successful outcomes; not necessarily a degree, automatic AUMs, certifications or onsite presence. In fact, some competition experts, like Shirley Svorny PhD, a professor of economics and chair of the Department of Economics at California State University, wonder if a medical degree is a barrier – rather than enabler – of affordable healthcare.

Link: https://healthcarefinancials.wordpress.com/2009/01/08/medical-licensing-obstacle-to-affordable-quality-care

Others even presume the establishment of virtual medical schools and hospitals, where students and doctors learn and practice their art on cyber-entities that look and feel like real patients, but are generated electronically through the wonders of virtual reality units. The same can be said for the financial services industry, although much farther down-line given its current slow rate of real education and quasi-professional acceptance.

[B] Rule No. 2

Challenge conventional wisdom, think outside the traditional box, recapture your dreams and ambitions, disregard conventional gurus and work harder than you have ever worked before. Remember the old saying, “if everyone is thinking alike, then nobody is thinking”. Do collective-nistas and nationalized healthcare advocates react rationally; or irrationally? [THINK: Wall Street, medical unions]

[C] Rule No 3

Differentiate yourself among your healthcare and financial advisory peers. Do or learn something new and unknown by your competitors. Market your accomplishments and let the world know. Be a non-conformist. Conformity is an operational standard and a straitjacket on creativity. Doctors and FAs should create and innovate, not blindly follow organization or political “union” leaders [shop stewards, BDs, etc] into oblivion.

[D] Rule No 4

Realize that the present situation is not necessarily the future. Attempt to see the future and discern your place in it. Master the art of the quick change with fast but informed decision making. Do what you love, disregard what you don’t, and let the fates have their way with you. Then, decide for yourself if you are of this ilk – and adhere to any of the above rules? Or, just become an employed [government, BD] doctor or FA shill. Just remember that the political party, or monopoly that can give you a job, can also take it away [THINK: LB, ML, Wachovia, national healthcare, etc].

CP 1

Memorial Day Considerations

Finally, on this Memorial Day weekend, consider that life and career is a journey, and that in this country we have the choice to ponder or pursue any, and all of the above options, and more. We have the ability to think, cogitate and ruminate, as we have done here today. So – please – thank those who have helped turn this idealistic philosophy, into pragmatic daily reality.

For us personally, we thank Bonze Star Medal Winner Captain Cecelia T. Perez, RN. Now – ponder and consider – who do you thank? If no one has impacted you up-close on this Memorial Day weekend and national holiday, please visit our military channel to reflect, comment and opine.

Link: https://healthcarefinancials.wordpress.com/category/military-medicine

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.

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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Financial Advisory Reform Going Down in Flames

A [False] Hobson’s Choice*

By Staff Reporters

In political Washington DC, according to Ian Salisbury, almost anything will fly if you can make an argument it will benefit the middle class. It worked in the fight against requiring advisors to act in clients’ best interests … Say what?

Is this the case of a classic Hobson’s choice?

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The Strategy

Yep, its true! At least, this strategy worked for the National Association of Insurance and Financial Advisors [NAIFA], which fought a recent proposal that would have made all financial advisors act in clients’ best interests … you know – the “F” word.

Assessment

It seems that there are few protections for the public from unscrupulous FAs, stockbrokers, and insurance agents. And, few wish to become fiduciaries.

http://www.fa-mag.com/online-extras/5406-a-phony-argument.html

*A Hobson’s choice is a free, usually economic, choice in which only one option is offered.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Please visit: www.CertifiedMedicalPlanner.com

As former certified financial planner, insurance agent, stockbroker, surgeon and this ME-P publisher Dr. David Edward Marcinko MBA, CMP™ has always opined to physician colleagues: it is “buyer-beware” out there!

Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.

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Health Administration Terms: www.HealthDictionarySeries.com

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About the Covestor Mutual Fund Portfolio Sharing Service

Certified Medical Planner

What it is – How it works

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

Covestor, with offices in New York and London, is a web platform started by entrepreneurs Perry Blancher, Richard Tachta and Simon Veingard http://www.covestor.com. Their belief was that salaried mutual fund managers have no monopoly on investment talent and shouldn’t have a lock on the rewards that come with investment success. As financial services, and online netizens, they also believed in democratizing the investment management industry and helping proven self-investors compete with the large institutions. This is known as the power of “crowd-sourcing.” All core philosophies seem to be shared by this ME-P.

What it is

According to their website, Covestor is both a portfolio sharing service for proven self-investors and for those wishing to track them; where data is private, secure and anonymous. With Covestor, one can coat-tail successful investors and follow their real trade activity. Or, have their moves auto-traded for you by Covestor Investment Management. Members can also keep track of their investments andBuild a free track record comparable to professional mutual funds. Members earn fees for their hard work, and Manage a model that their clients can mirror thru shared management fees.

Profit Sharing Investors

Covestor investors sharing portfolios include professionals, full time amateurs and industry specialists. They are a serious bunch with an average reported portfolio size of over $200,000 (excluding cash). Positions are typically held in over 5,000 different equities; are based in 50 countries and span the full range of ages, backgrounds and styles.

Issues

As a doctor-investor, health economist and former certified financial planner, there are at least three issues needed to be raised about this firm.

The first is SEC/NASD/FINRA rules and applicable SRO and state regulations for brokers, RIAs, FAs and related others? The status of suitability versus fiduciary accountability for ERISA regulated plans is also questioned. The third [and least important] is the potential negative impact on traditional financial services “professionals.”

In other words, is this another example of how technology will flatten the “intermediary curve” and reduce the profit of middle sales-men and sales-women? Oh! What about medical specificity for our target audience?

www.CertifiedMedicalPlanner.org

Assessment

I am sure there are other issues as well. Your thoughts and comments on this ME-Pare appreciated; especially from financial services “professionals”, lawyers and FAs, etc, Give em’ a click and tell us what you think http://www.covestor.com?

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

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New Regulations Needed For Financial Planners?

So Says New Coalition

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

The Financial Planning Coalition [FPC] is pushing for a law that would require anyone calling themselves a financial planner to meet certain ethical and educational standards and to register with the Securities and Exchange Commission [SEC].

About the FPC

According to its’ website, the Financial Planning Coalition is a collaboration of Certified Financial Planner Board of Standards (CFP Board), the Financial Planning Association® (FPA), and the National Association of Personal Financial Advisors (NAPFA) to advise legislators and regulators on how to best protect consumers by ensuring financial planning services are delivered with fiduciary accountability and transparency. Americans have grown leery of those who work in financial services.

Currently, financial planning (the process of advising individuals and families across a range of personal finance topics in addition to investment advice) is unregulated as a profession, resulting in major gaps in current laws. So, is it really a “profession” many ask – void of any significant barrier to entry?

The Financial Planning Coalition intends to work with Congress to produce legislation that puts the interests of clients first and enables consumers to identify a trusted financial adviser.

To learn more about the Financial Planning Coalition’s purpose and mission, click here to read, or download the Statement of Understanding [PDF].

SEC Wrong Oversight Agency?

According to this report in Financial Advisor magazine, an advertiser-driven trade journal:

the standards would be set by a public oversight board that would be funded by small registration fees paid by the financial planners, said Robert Glovsky, chair of the Certified Financial Planner Board of Standards during a conference call today. The CFP Board, as well as the Financial Planning Association and the National Association of Personal Financial Advisors makes up the coalition.

Exemptions

However, brokers and insurance agents would not be forced to register as financial planners, but those who held themselves out as financial planners would have to meet the required minimum competency and ethics standards or stop using the financial planner title.

Assessment

And so, as we have noted, written, preached and warned for more than a decade – anyone can call themselves a financial planner, or financial advisor; so beware medical colleagues.

More: http://www.fa-mag.com/fa-news/5314-new-regs-needed-for-financial-planners-coalition-says.html

NOTE: The fiduciary definitional standard conundrum was not even addressed in the article or by the committee, as far as I know. Moreover, note that SEC oversight was in place before, during and now after the Bernie Madoff scandal – so enough said about competency! www.HealthDictionarySeries.com

Conclusion

Your thoughts and comments on this ME-P are appreciated. What do you think FAs, and CFPs®? Should all become an RIA or ERISA styled fiduciary? Or, will this be another CFP® lite fiasco?

Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.

Disclaimer: I am a former certified financial planner and CEO of the online www.CertifiedMedicalPlanner.com program for fiduciary advisors working in the healthcare space.

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

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Dr. Somnath Basu on Investing

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He Writes for the Medical Executive-Post

By Ann Miller; RN, MHA

[Executive-Director]

Dr. Somnath Basu is no stranger to the ME-P, or the financial planning community. He is a Professor of Finance at California Lutheran University and the Director of its California Institute of Finance.

Academic Background

Dr Basu earned his BA in Economics, University of Delhi, MBA (Finance), Marquette University and a PhD (Finance), University of Arizona. He is well published and is an award winning teacher. He has significant consulting experience with US Fortune 100 companies, advising institutional money managers and in developing proprietary finance and planning software. He serves on various Boards and committees including the CFP (chaired the Model Curriculum Revision Committee) Board of Standards and the Financial Planning Association.

Basu’s New Book

His new book, co-authored with Professors’ Block and Hirt, Investment Planning for Financial Professionals is available now, published by McGraw Hill, in May 2006.

Link: http://www.amazon.com/Investment-Planning-Geoffrey-Hirt/dp/0071437215/ref=sr_1_1?ie=UTF8&s=books&qid=1265918999&sr=1-1

Additional essays by Dr. Basu can be viewed at: http://blog.fpaforfinancialplanning.org/author/somnathbasufpa/

He also writers a column for the Journal of Financial Services Professionals. He can be reached at:

Contact Dr. Somnath Basu
Director – California Institute of Finance
Cell: 805 405 4448
Work: 805 493 3980
http://www.clunet.edu/cif

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners(TM)

Our Recent Experience with CFP® Mark Utility

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Certification Falling from Grace – Deserved or Not?

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief] dem21 

The Premise

In the summer [2008], we sent a random email blast to the first 200 Certified Financial Planners® on our list-serve. These were folks who had previously contacted us, and/or purchased our textbooks, handbooks, tools and/or dictionaries that assist accountants, financial advisors, attorneys, medical management consultants and all those working to assist physicians and medical professionals on business and economics matters.

The “Straw-Poll” Query

Our email blast asked the simple question:

“Did you ever voluntarily resign your license to use the CFP® mark?”

First Round Results

We received four positive responses [2%]. We then followed up to learn that 2 of the 4 were CPAs, one was a CFA and another was an MBA. Now, what do these results signify – probably nothing – or maybe an emerging trend?

Repeat

So, last summer [2009], after the continuing Wall Street collapse, and the Somnath Basu PhD article on “CFP Trust” in Financial Advisor magazine and this blog, we sent out a follow-up email to the exact same 200 Certified Financial Planners® as before; but carved-out and replaced the 4 CFPs who had resigned the mark, with 4 others.

Link: I Jealously “Shake my Fist” at Somnath Basu PhD

This time we asked the question:

“Have you recently considered allowing your CFP mark to lapse; or resigning it?”

Second Round Results

This time we received exactly eight positive replies [4%] or double the number from the first round. One CFP® said:

“I am rethinking my entire business and marketing philosophy. This includes separation from any taint left over from recent industry scandals – and yes – even including my CFP® mark”

 CMP logo

http://www.CertifiedMedicalPlanner.org

Assessment

This little experiment was not statistically significant by any means. And, again it probably is indicative of nothing. Yet, these types of questions must be boldly asked today; even if they were not even timidly asked yesterday.

Nevertheless, cited plausible reasons for the increased negative CFP® mark response may be:

 

  • CFP BoS lacks modernity and membership alliance. 
  • SEC mismanagement.
  • NASD/FINRA impotence.
  • Wall Street greed.
  • Lack of true fiduciary accountability.
  • Client anger and public distrust.
  • Advisor frustration at lost income.
  • College for Financial Planning and American College credibility.  
  • ME-P operations in the medical niche advisory space.
  • CFP® mark and related industry certification taint.
  • Alternative degrees and available designations.
  • Rise of RIAs and the fiduciary CMPmark for healthcare specificity.
  • Resigning [doing] and considering [thinking] are not equivalent;
  • etc, etc. 

It is interesting to note that no CFP® resigned their mark who did not hold either another graduate degree [MBA, MSFS, MA, MS, PhD], or more rigorous industry [CFA and CPA] certification.

Assessment 

So, is CFP mark allegiance just a union-like mentality of “united we stand – divided we fall”, by those with little to no gravitation pull of their own – or something else; ie., industry group think? You decide; and do tell us what you think.

Note: I am the founder of the CMP online education and certification program for financial advisors and consultants interested in the health economics, finance and medical practice management space, and a former [resigned] certified financial planner www.CertifiedMedicalPlanner.org 

Update 2013:

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

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Why Most Financial Advisors Won’t be Fiduciaries

Industry Groups Differ On Fiduciary Standard

By Staff ReportersBenjamin Bills

The House Financial Services Committee recently heard two takes on the fiduciary standard – investment advisors who want it applied to broker dealers – and broker-dealers who want to apply a universal standard of care to all advisors, including investment advisors.

Assessment

And so, we encourage all ME-P subscribers to read industry trade magazines [aka ”trade rags”] to learn how some financial advisors fleece physicians and other investors by not being fiduciaries; with sincere apologies to all honest and hard working fiduciary advisors.Become a CMP IOW: Follow the money.

Link: http://www.financialadvisormagazine.com/fa-news/4532-industry-groups-differ-on-fiduciary-standard-.html

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Evaluating a Sample Physician Financial Plan I

Stress Testing Our Results a Decade Later

By Dr. David Edward Marcinko; CPHQ, MBA, CMP™

By Hope Rachel Hetico; RN, MHA, CPHQ, CMP™dave-and-hope4

We are often asked by physicians and colleagues; medical, nursing and graduate students, and/or prospective clients to see an actual “comprehensive” financial plan. This is a reasonable request. And, although most doctors who are regular readers of this Medical Executive-Post have a general idea of what’s included, many have never seen a professionally crafted financial plan. This not only includes the outcomes, but the actual input data and economic assumptions, as well.

The ME-P Difference

And so, in a departure from our pithy and typically brief journalistic style, we thought it novel to present such a plan for hindsight review. But; we present same in a very unusual manner befitting our iconoclastic and skeptical next-generation Health 2.0 philosophy. And, we challenge all financial advisors to do same and compare results with us.

How so?

By using a real life plan constructed a decade ago and letting ME-P reader’s review, evaluate and critique same. 

  • Part I is for a married drug-rep, then medical school student [51 pages] with no children.
  • Part II is for the same, now mid-career practicing physician [28 pages] with 2 children.
  • Part III is for the same experienced practitioner at his professional zenith [56 pages].   

Link: Sample Financial Plan I

Fiduciary Advisors?fp-book2

As reformed financial advisors and former licensed insurance agents; and a former certified financial planner – it is now  our professional duty to act as health economists and fiduciaries for our clients and colleagues. In other words; to put client interests above our own. This culture was incumbent in our participatory online www.CertifiedMedicalPlanner.com educational program in health economics and medical practice management; since inception in 2000.

 

Assessment

And so, as Edward I. Koch famously asked as Mayor of New York City from 1978-1989: “how am I doing”; we sought to ask and answer same. What did we do right or wrong; and how were our assumptions correct or erroneous?  As Certified Professionals in Healthcare Quality this is the question we continually seek to answer in medicine. And, as health economists, this is the financial advisory equivalent of Evidence Based Medicine [EBM] or Evidence Based Dentistry [EBD] etc. It is a query that all curious FAs should ask.

Note: Sample plans II and III to follow; so keep visiting the ME-P

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. As a financial advisor, accountant, financial planner, etc., we challenge you to lay bare your results as we have done. And, be sure to “rant and rave” – and – “teach and preach” about this post in the style of Socrates, with Candor, Intelligence and Goodwill, to all.  

Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.

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ASSUMPTIONS

Sample Mega Plan for a New Physician 

Joe Good, a 30-year-old pharmaceutical sales representative, and his pregnant wife Susie Good, a 30-year-old accountant, sought the services of a certified financial planner because of a $150,000 inheritance from Joe’s grandfather. The insecurity about what to do with the funds was complicated by their insecurity over future employment prospects, along with Joe’s frustrated boyhood dream of becoming a physician, along with only a fuzzy concept of their financial future. 

After several information-gathering meetings with the CFP, concrete goals and objectives were clarified, and a plan was instituted that would assist in financing Joe’s medical education without sacrificing his entire inheritance and current lifestyle. They desired at least one more child, so insurance and other supportive needs would increase and were considered, as well. Their prioritized concerns included the following:

1. What is the proper investment management and asset allocation of the $150,000?

2. Is there enough to pay for medical school and support their lifestyle?

3. Can they indemnify insurance concerns through this transitional phase of life,  including the survivorship concerns of premature death or disability?

4. Can they afford for Susie to be the primary bread winner through Joe’s medical school,   internship, and residency years?

5. Can they afford another child?

Current income was not high, and current assets were below the unified estate tax-credit. Therefore, income and estate-planning concerns were not significant at that time.

After thoroughly discussing the gathered financial data, and determining their risk profile, the CMP™ made the following suggestions: 

1. Reallocate the inheritance based on their risk tolerance, from conservative to long-term growth.

2. Maximize group health, life, and disability insurance benefits.

3. Supplement small quantities of whole life insurance with larger amounts of term insurance.

4. Create simple wills, for now. 

Sample Mega Plan for a Mid-Life Physician 

A second plan was drawn up 10 years later, when Joe Good was 40 years old and a practicing internist. Susan, age 40, had been working as a consultant for the same company for the past decade. She was allowed to telecommunicate between home and office. Daughter Cee is nine years old, and her brother Douglas is seven years old. 

The preceding suggestions had been implemented. The family maintained their modest lifestyle, and their investment portfolio grew to $392,220, despite the withdrawal of $10,000 per year for medical school tuition. The financial planning aspects of the family’s life went unaddressed. Educational funding needs for Cee and Douglas prompted another frank dialogue with their CMP. Their prioritized concerns at this point were as follows:

1. Reallocation of the investment portfolio

2. Educational funding for both children

3. Tax reduction strategies

4. Medical partnership buy-in concerns

5. Maximization of their investment portfolio

6. Review of risk management needs and long-term care insurance

7. Retirement considerations

The following suggestions were made:

1. Grow the $392,220 nest egg indefinitely.

2. Project future educational needs with current investment vehicles.

3. Maximize qualified retirement plans with tax efficient investments.

4. Update wills to include bypass marital trust creation, and complete proper testamentary planning, including guardians for Cee and Douglas.

5. Retain a professional medical practice valuation firm for the practice buy-in.

Sample Mega Plan for a Mature Physician 

At age 55, Dr. Joseph B. Good was a board-certified and practicing internist and partner of his group. Susan, age 55, was the office manager for Dr. Good’s practice, allowing her to provide professional accounting services to her husband’s office and thereby maximizing benefits to the couple from the practice. Daughter Cee was 24 years old, and her brother Douglas was 22 years old. The preceding suggestions had been implemented.  They upgraded their home and modest lifestyle within the confines of their current earnings. They did not invade their grandfather’s original inheritance, which grew to $1,834,045. Reallocation was needed. The other financial planning aspects of their lives had gone unaddressed. Retirement and estate planning issues prompted another revisit with their original CMP’s junior partner.

Their prioritized concerns at this point were as follows:

1. Long-term care issues

2. Retirement implementation

3. Estate planning

4. Business continuity concerns

The following suggestions were made:

1. Analyze the cost and benefits of long-term case insurance, funded with current income until retirement.

2. Reallocate portfolio assets and  plan for estate tax reduction, with offspring and charitable planning consideration..

3. Retain a professional practice management firm for practice sale, with proceeds to maintain current lifestyle until age 70.

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Medical Executive-Post

Impact of Performance Fees on Mutual Funds and Physician Portfolios

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More Complex than Realized by Some Doctors

[By Dr. David Edward Marcinko; FACFAS, MBA, CMP™]

[By Professor Hope Rachel Hetico; RN, MHA, CMP™]dave-and-hope4

Physician-investors may find themselves paying advisory fees, brokerage commissions, and other sales charges and expenses. All of these layers of expense can reduce or eliminate the advantage of professional management, if not monitored carefully. Also, fees can have a major impact on investment results. As a percentage of the portfolio, they normally range from low of 15–30 basis points (or .15% to .30%, a basis point is one one-hundredth of one percent) to a high of 300–400 basis points or even higher.

Charges are Universal

All portfolio managers, mutual funds, and investment advisors charge fees in one form or another. Ultimately, they must justify their fees by creating value added, or they would not be in business. Value added includes tangibles, such as greater investment return, as well as intangibles, such as assurance that the investment plan is successfully implemented and monitored, investor convenience, and professional service.

Comparisons Required

Always compare investment performance of funds or managed accounts after fees are deducted; only then can adequate comparisons be made. Also, compare fees within asset classes. Management fees and expenses of investing in bonds or bond funds are much different than the fees of investing in, for example, small companies or emerging market stocks. Whereas 100–200 basis points of fees may be appropriate for an equity portfolio or fund, similar charges may offset the advantages of a managed bond portfolio. With managed bond portfolios, real bond returns have limited long-term potential, because returns are ultimately based on interest rates. For example, if a 3% real (i.e., after inflation) return is expected, 200 basis points in fees may produce a negative after-tax result: 3% real return minus 2% fees minus 10% taxes equals a negative 9% total return.fp-book22

Sales Charges

Mutual funds (and some private portfolio managers) charge sales charges to sell or “distribute” the product. Investors who buy funds through the advice of brokers or “commission based” financial planners will pay a sales load. The many combinations of sales charges fall into three basic categories: front-end, deferred (or back-end), and continuous.

Front-End Fees

Front-end fees are a direct assessment against the initial investment and are limited to a maximum of 8.5%. They usually are stated either as a percentage of the investment or as a percentage of the investment, net of sales charges. For example, a 6% charge on a $10,000 investment is really a $600 charge to invest $9,400 or a real charge of 6.4%. Many low-load funds charge in the range of 1% to 3%. Rather than pay brokers or other purveyors, these fund companies or sponsors use the charges to offset selling or distribution costs. Although rare, some funds charge a load against reinvested dividends.

Deferred Charges

Deferred charges (or back-end loads, or redemption fees) come in many forms. Often, the longer the investor stays with the fund the smaller the charge is upon fund redemption. A typical sliding scale used for deferred charges may be 5-4-3-2-1, where redemption in year 1 is charged 5%, and redemption in year 5 is charged 1%; after year 5, there are no sales charges. Sometimes deferred charges are combined with front-end charges.

Redemption Fees

Certain quoted redemption fees may not apply after a period, such as one year. Funds often use such fees to discourage the trading of funds. Frequently, these charges are paid to the fund itself rather than to the fund management company; or broker. Long-term physician investors actually benefit from this fee structure; short-term shareholders who redeem shares bear the additional liquidation costs to satisfy redemption requests.

Continuous Charges

Continuous sales charges, known as 12b-1 fees for the SEC rule governing such charges, represent ongoing charges to pay distribution costs, including those of brokers who sell and maintain accounts, in which case they are known as “trail commissions.” The fund company may be reimbursed for distribution costs as well. In the prospectus, funds quote 12b-1 charges in the form of a maximum charge. This does not mean that the full charge is incurred, however. For example, a fund with a .75% 12b-1 approved plan may actually incur much lower expenses than .75%. Compared to front-end charges, a .75% per year sales charge of this type could be more costly to investment performance, given enough time.

Sales Loads

Portfolio managers can charge sales loads as well, usually in the form of a traditional WRAP fee arrangement (the investor pays a broker an all-inclusive fee that covers portfolio manager fees and transactions costs). No-load funds can be purchased through brokers or discount brokerage firms. The broker charges a commission for such purchases or sales.

Management Advisory Fees

Private account managers and mutual funds charge a fee for managing the portfolio. These fees typically range between 25 and 150 basis points. Bond funds tend to charge in the range of 25 to 100 basis points, and equity funds charge 75 to 150 basis points. Fees charged by private account managers usually are higher because of the direct attention given to a single doctor client. These managers do not pass along additional administrative costs, however, because they pay them out of the management fee. These management fees come in many forms. Tiered fees can charge smaller accounts a higher fee than larger accounts. Mutual funds often charge “group fees”: a fund family may tier its fee structure to encompass all funds offered by the fund family or by a group of similar funds (such as all international equity funds). Performance fees, although subject to SEC regulations, may be charged as well. A performance fee may be charged if the manager exceeds a certain return or outperforms a particular index or benchmark portfolio.

Administrative Expenses and Expense Ratios

Most private managers are compensated with higher management fees, as mentioned above. Therefore, many private accounts usually do not incur separate administrative expenses. Some management firms charge custodial fees or similar account maintenance fees. Mutual funds incur a number of administrative expenses, including shareholder servicing, prospectuses, reporting, legal and auditing costs, and registration and custodial costs. Mutual funds report these expenses and management fees as an expense ratio—the ratio of expenses to the average net assets of the fund. Expense ratios also include distribution costs or 12b-1 charges.insurance-book10 

Brokerage Commissions

Almost all buyers and sellers of securities incur brokerage commissions. Private “wealth managers” usually provide commission schedules to prospective physician-investors or current clients. Some private managers charge higher management fees and a discounted commission schedule, while others charge lower fees and higher commissions. These combinations of management and commission fees make comparison of prospective managers’ cost structures a difficult task. Most portfolio managers obtain research from brokerage firms, which can affect the commission relationship between broker and manager. Reduced commission schedules exchanged for information are known as “soft dollar costs.” Mutual funds may negotiate similar reduced commission schedules. In this regard, more-competitive brokerage firms can charge lower fees to investors. Commissions are not part of the expense ratio, because they are a part of the security cost basis. Firms with higher portfolio turnover are more likely to have higher commission costs than those with low turnover. Asset class impacts such costs as well. For example, small-cap stocks may be more expensive than large-cap stocks, or foreign bonds may be more expensive than domestic bonds.

Total Cost Approach

To arrive at a relevant comparison of fees among funds and managers, and to see what the total effect of fees on investment performance is, analyze the various charges on a net present value basis. Begin with a given investment amount (e.g., $10,000) and factor in fees over time to arrive at the present value of those fees. Present the comparisons in an easy-to-use table.

Sources of Fee Information

Consult the mutual fund prospectus for fee information. The prospectus has a fund expenses section that summarizes sales charges, expense ratios, and management fees; it does not cover commissions, however. Expense ratios usually are reported for the past 10 years. Commission or brokerage fees are more difficult to find. The statement of additional information and often the annual report disclose the annual amounts paid for commissions. When the total commission paid is divided by average asset values a sense of commission costs can be determined. Private wealth managers disclose fee structures in the ADV I filed with the SEC. Managers must disclose these fees to potential and current clients by providing either ADV Part II or equivalent form to the investor.

Reporting Services

Reporting services, such as Morningstar and Lipper, provide similar information from their own research of mutual funds. These services can be extremely beneficial, because fee information is summarized and often accounted for in the reports’ investment return calculations. This helps the investor and planner make good comparisons of funds. Information services that cover private managers provide information, primarily about management fees.

Assessment

To the extent that online trading, deep discount brokerages, lack of SEC and FINRA oversight, and the recent financial, insurance and banking meltdown has affected the above, it is left up to your discretion and personal situation. Generally, all fess are, and should be, negotiable.

Disclaimer: Both contributors are former licensed insurance agents and financial advisors.

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

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OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

***

Advetising in “Worth” and “Bloomberg” Magazines

Advertisers – Give Me a Break!

By Dr. David Edward Marcinko; MBA, CMP™dr-david-marcinko16

Did you know that financial advisor Judith Zabalaoui, age 71, considered a pioneer of the fee-only business-model of financial services sales, pleaded guilty to using a Ponzi scheme to embezzle more than $3 million from her New Orleans area clients between 1993 and 2007? Yep, it’s true, but this is not really noteworthy to many pundits considering the current financial meltdown on Wall Street. But, do you know … the rest of the story?

Resource Management Inc.

Most of Zabalaoui’s clients came from Resource Management Inc. in Metairie, La., which she founded in 1974, according to the Times Picayune. Apparently, she became a Certified Financial Planner® in 1979, but the certification expired in 1999.

Link: http://www.nola.com/business/t-p/index.ssf?/base/money-1/1233728420253000.xml&coll=1

Assessment

So, here’s the rub. According to reports, Resource Management Inc. was the only firm in the country where each of the principals were allegedly “selected” by Worth [1996 to present], Money [1987] and/or both magazines as one of the top financial consultants in the country. The company also made Bloomberg Wealth Manager’s list of top wealth managers in 2004.

Industry Indignation Index: 55

Now, with all due respect and humility, I have been asked several times by Worth and Bloomberg to “promote yourself” in their “advertiser-driven” publications as a top financial consultant; but never Money magazine. I have always refused their selection charges for same of $12-18,000.

Full disclosure: I am the Founder of www.CertifiedMedicalPlanner.com and a reformed insurance agent, registered investment advisor and Certified Financial Planner™.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Was Judith Zabalaoui a fiduciary and what about these magazine “best-of” awards? Are they worthwhile monikers or worthless sales advertisements? What about all the so-called financial certifications, designations and charters; meaningful or meaningless? What is your opinion?

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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About Fi360.com

Education for Financial Fiduciaries

Staff Reportersnyse1

According to the firm and website, www.Fi360.com offers a full circle approach to investment fiduciary education, practice management and support that has established it as the go-to source for investment fiduciary insights.

 

The Term “Fiduciary” Defined?

And, Fi360 defines an investment “Fiduciary” as:

“Someone who is managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility”

Related definitional info: www.HealthDictionarySeries.com

Practitioner Based

With substantiated best-practices as a foundation, the firm offers training, tools and resources that are essential for fiduciaries and those who provide services to fiduciaries to effectively and successfully manage their roles and responsibilities. Fi360 say it is committed to assisting those who rely on their education programs, Web-based analytical software and resources to achieve success.

Training

Fi360 offers both AIF® and AIFA® training curriculums. The AIF® curriculum instructs investment fiduciaries on how to fulfill their duties to a defined standard of care. The AIFA® curriculum instructs participants on how to assess the conformance of investment fiduciaries to a Global Fiduciary Standard of Excellence [GFSE] using an ISO-like assessment process. These training curriculums are available in both classroom and Web-based settings; customized program are also available. Participants who successfully complete the programs, submit dues, agree to a code of ethics and meet other prerequisites may earn the AIF® or AIFA® designations, respectively.

Goals and Objectives

The goal of Fi360 is to help investment fiduciaries manage their responsibilities. But, according to Bennet Aiken AIF®, Fi360 Communications Coordinator, it is important to realize that AIF® / AIFA® designees are not required to be fiduciaries. While these designations are symbolic of training, knowledge and ongoing fiduciary development, they do not mean certification holders will always be acting as a fiduciary.

Assessment

Publications, blogs, articles, national conferences, assessments and more material for the collective and ongoing support of the fiduciary community are available; many for free and/or for the general public.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. But, why would a healthcare institution, medical practice, clinic or individual physician-investor hire anyone who will not act as a fiduciary and put their interests first; especially an AIF®/AIFA certification holder?

Note: Beginning today, and for the entire month of March 2009, we will be posting an exclusive interview with Bennett Aikin AIF®, the Communications Coordinator for fi360.com. Our topic will be on the rules, regulations and very definition of the modern financial fiduciary. Perhaps he can explain it all? Don’t miss it!

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

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Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Financial Product Sales, Communication and Management

Techniques-of-Art for Financial Advisors

By Robert Ayrer and ME-P Staff Writers

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Before any piece of work that requires communication can be understood, the context must be established.  Without context, words have very little reality; and without reality, there can be no communication. Communication is the “transfer of meaning.”

Introduction

The lack of a definitive role of the marketing function (and the sales function, and the difference between the two) for financial advisors [FAs], has contributed to the lack of clarity required for the achievement of sales targets. The fuzzy line between “targets” and “goals” has left most financial product salesmen, OSJs [Office of Supervisory Jurisdiction] and sales managers without the “tools to manage.” In this context, we will define the financial sales person’s role as the “person responsible for the execution of the corporate, or personal, sales plan, which includes the short term marketing of the company.”

Marketing versus Sales

Long term strategic marketing is a very sophisticated process, requiring highly trained people that are not involved with the mundane, day-to-day activities of the enterprise.  Unfortunately, this type of “marketing” is done by too few businesses, RIAs, BDs, and FAs.

The “marketing plan”, as defined by Malcolm H. B. McDonald, Director of the Cranfield Marketing Planning Centre, of the Cranfield School of Management, is a comprehensive business plan, incorporating and integrating all of the elements of business; the four “P’s” — Product, Price, Place and Promotion. More often than not, financial sales organizations and RIAs are run by people with “Director of Sales & Marketing” titles.  This use of the “marketing” title often confuses the difference between marketing and sales. For our purposes, we will include the very short term marketing function in the sales department’s role.

Dirty Ear Marketing

This “very short term marketing” required of the FA or sales person is what is called “The dirty ear” marketing.  The “dirty ear” comes from “keeping an ear to the ground” to detect changes in the market that would affect the assumptions that support the marketing plan and the company sales plan.

It has been said that the American plains Indians could drive a stick into the ground, put the end of the stick to their ear and tell if the buffalo herd was within twenty miles — and, by bending the stick, tell in which direction.  The more sophisticated tracker could tell whether the herd was approaching or going away.

It is this short term, close in, change in direction of the market (herd) upon which the assumptions of the marketing and sales plan are based, that should be the concern of the sales department or financial advisor and business owners. 

Of Bull and Bear Markets

For example, during times of economic expansion, and bull markets, the purchasing authority for many items is transferred down the reporting chain to the lowest possible responsible level of management. At this level a sales person or FA may only require one or two calls to complete the selling process with a buying authority. This authority level would dictate the activity of sales people in achieving their personal sales plan and achieving their targets and goals. 

During a recession however, as is occurring now, authority to buy may be withdrawn from the customary buying level, designating someone at a higher level as the “buyer.” The financial sales person still must go through the traditional contact at the lower level. These contacts can now only say “no”. They cannot say “yes.” By adding another level of decision making to the buying process, additional activity will be required to make the average sale. You cannot double the activity required to make a sale and make the same number of sales!  Don’t make the mistake of thinking that working harder is the answer, as there is only a finite amount of time available to get to your prospects. Your options are; change the plan; adjust the sales budget; add more sales representatives.

The Sales Cycle

Continuing a sales plan based upon the assumption of a two-call sales cycle when the market requires a three or four call cycle will take your sales plan out of reality.  The key to both a good marketing plan and a good sales plan is “reality.”  It is the FA or sales manager’s prime function to see that the sales organization is working in “reality” by constantly testing the basic assumptions of the sales plan.

The challenge to every financial services business owner, sales manager and every FA sales person is to stay focused on the prime objective of a sales person – processing the sale.  To maintain focus on the sales objective, the activities of a sales person should be looked at in two categories; “tasks” and “selling objectives.”  The tasks are those activities that all sales people are required to do to service clients – handle back-charges, warranty claims, stocking services, point of sale maintenance, etc.  The selling objectives are defined by the sales progression used in the sales strategy.

Processing the Sale

To give better understanding to this concept, consider the following.  If you find a local bank that offers a certificate of deposit that is paying a good return, and you put $10,000 on deposit, you have made an “investment.”  It is an “investment” because you expect your money back with a profit.  To find this investment opportunity you must be focused externally (not within your own business).  And, investments are a source of new capital.

If, on the other hand you take the $10,000 and purchase a car for your business, your focus is internal to your business, solving a problem of transportation, and you will only realize gain by reducing an existing or potential expense. You will not realize any new capital from this expenditure.  This use of the $10,000 is an “expense.”

Internal and External Focus

To generalize, if your focus is external and you are seeking to generate new capital by exploiting new opportunities, this is an investment.  If your focus is internal, and you are solving problems (the activities that come after the sale), the time and money spent is an expense.

Tasks and Objectives

Sales people sometimes lose sight of the difference between the “tasks” (internally focused after sales activities that are expenses to the company) and the sales “objectives” (opportunity seeking activity that will result in generating new capital through sales). Although we must service the task items, we can avoid “buying” the customer’s problem (forgetting that the customer’s problem is our opportunity).  The way we make sure we maintain focus on the opportunity rather than the problem – is to link every task with a sales objective. 

Management Reporting

Historically, we have asked sales people and FAs to report to management through an activity report that usually records the “task” items but ignores the opportunity items. To use the reporting system as a training and management tool, stop requiring the typical activity and expense reports.

Instead, ask your sales people fill out an “Opportunity” report and an “Investment” report.  It is true; “What gets measured gets improved!”  If you want your sales people to be externally focused and seek opportunities, investing in accounts rather than “solving problems” and spending money (“expense” items), measure and report on the opportunities and investments.  It is more positive to run an investment department for your business rather than a cost center.

Managing For Results

Peter Drucker observes that “… there are no profit centers in a business; there are only cost centers.”  The profits centers are external.  Again, quoting Drucker; “Results are obtained by exploiting opportunities, not by solving problems!”

Assessment

The above offering is intended to help financial advisors and sales people “manage” themselves, and for the sales people who have assumed the mantle of OSJ or “manager”, etc

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated.

Speaker:If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com 

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Physician Advisors: www.CertifiedMedicalPlanner.org

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Product DetailsProduct DetailsProduct Details

RIA Merger Mania and the Medical PPMC Fiasco

What is Old is New Again -or- Lessons Learned

By Dr. David Edward Marcinko; MBA, CMP™

 dr-david-marcinko9According to the article Great Expectations-Disappointing Realities that recently appeared in Registered Representative, a trade magazine for the financial services industry, by John Churchill, the booming stock market of the last five years saw many Registered Investment Advisory [RIA] firms sell a portion of their future cash flows in return for cash and stock in an acquiring consolidating firm. This is known as a roll-up, or consolidator, business model. I am quite familiar with it, as both a doctor and financial advisor. I believe my dual perspective of both camps is somewhat unique, as well.

The NYSE Collapse

As the stock market collapsed in 2008-09, many RIAs who previously sold stakes to these “roll-up” consolidator firms began scrambling to pay quarterly preferred disbursements.  What gives, many implored? As a reformed Certified Financial Planner™, RIA representative, financial advisor and insurance agent, I can draw many parallels from these present day RIA consolidators to the similar Physician Practice Management Corporation roll-up fiasco of 1999-2000? Indeed, I can, and will [www.HealthcareFinancials.com]

My Experience with Medical Practice Consolidators

As a clinician and surgeon, I was the past president of a privately held regional Physician Practice Management Corporation [PPMC] in the Midwest. I assumed this route about a decade ago, by happenstance and background, when I helped consolidate 95 solo medical practices with about $50 million in revenues. But, our small company’s IPO roll-up attempt was aborted due to adverse market conditions, in 1999. Fortunately, a conservative business model based on debt, not the equity which was all the rage at the time, saved us right before the crash of 2000. So, we harvested fiscally conservative physicians who lost only a few operational start-up bucks; but no significant dollars.

On the other hand, those PPMCs roll-ups based on equity lost much more. In fact, according to the Cain Brothers index of public PPMCs, more than 95% of all equity value was lost by doctor-investors hoping to cash in on Wall Street’s riches they did not rightly deserve; not by practicing medicine but by betting on rising stock prices. So, projecting a repeat disaster from medicine, to the contemporary RIA consolidator business model, was not a great leap for me. And unfortunately, this was one of the few times I was all too correct in my prognostications.

PPMC’s Today

The type of medical consolidator or roll-up, formally called the Physician Practice Management Corporation [PPMC], was left for dead by the year 1999. Even survivors like Pediatrix Medical Group saw its stock drop precipitously. And, more than a few private medical practices had to be bought back by the same physicians that sold out to the PPMCs originally.

RIA Example

I sure hope this does not occur with FAs, as well. But, if an entity is being bought back and accounts receivables are being purchased, FAs should be careful not to pick this item up as income twice. The costs can be immense to the RIA practice, as later clients of mine learned the hard way.

Buy-Backs

For example, let’s say a family practice [or RIA?] purchased itself back from a PPMC, or RIA consolidator. Part of the mandatory purchase price, approximately $200,000 (the approximate net realizable value of the accounts receivable), was paid to the PPMC to buy back accounts receivable [ARs] generated by the physicians buying back their practice. Now, if an office administrator unknowingly begins recording the cash receipts specifically attributable to the purchased accounts receivable as patient fee income; trouble begins to brew. If left uncorrected, this error can incorrectly added $200,000 in income to this practice and cost it (a C Corporation) approximately $70,000 in additional income tax ($200,000 in fees x 35% tax rate). The error in the above example is that the PPMC [or RIA consolidator] must record the portion of the purchase price it received for the accounts receivable as patient [advisory] fee income. The buyer practice has merely traded one asset – cash – for another asset, the accounts receivable [ARs].  When the practice collects these particular receivables, the credit is applied against the purchased accounts receivable (an asset), rather than to patient [RIA] fees.  

RIA Revolution Follows PPMC Evolution

Today, surviving medical PPMCs are evolving from first generation multi-specialty national concerns, to second generation regional single specialty groups [my type], to third generation regional concerns, and finally to fourth generation Internet enabled service companies providing both business to business [B2B] solutions to affiliated medical practices, as well as business like consumer health solutions to plan members [healthcare 2.0]. I trust this sort of positive morphing will occur, over time, with the RIA consolidators. Perhaps yes, or no [www.HealthDictionarySeries.com]

RIA Consolidators

Among the most distressed RIA roll-up entities today may be the publically traded National Financial Partners and its more than 180 acquired firms, with more than 320 members in 41 states and Puerto Rico. NFP specializes in life insurance and wealth transfers, corporate and executive benefits, and financial planning and investment advisory services. Jessica M. Bibliowicz has been NFP’s President and CEO since inception in 1999. She is the daughter of Sandy Weill, and a member of the Board of Overseers for the Weill Medical College and Graduate School of Medical Sciences of Cornell University. NFP’s stock has declined from a high of $56 more than a year ago, to a current trading range of $3-4.           

And the Question Is?

And so, the question that MDs and RIAs should have asked when contemplating this business model was simply this: would I but the stock of an acquiring roll-up company if I were not part of the deal?

Valuable Consideration

Why? When MDs and RIAs sell to a consolidator, part of their “valuable consideration” is stock equity, so confidence and a conscientious work ethic is important. But, these “‘sell-out” entities are not retirement vehicles according to former financial advisor Hope Rachel Hetico; RN, MHA, CMP™ – a nurse executive and managing partner for www.MedicalBusinessAdvisors.com. Hope is also managing editor of this blog forum.

Assessment

More pointedly, according to one seller mentioned in the Churchill article,

“the whole [consolidator] pyramid is built on cash flows based on incremental growth and hugely optimistic projections of that growth”.  

Conclusion

Rest assured, the consolidator business model can be very successful; just think H. Wayne Huizenga’s Blockbuster Video and Waste Management, Inc. And so, your thoughts and comments on this Medical Executive-Post are appreciated? Why didn’t consolidation work in medicine, or with the RIAs? Or, reframed, why did consolidation work in the garbage collections industry and video store space? Can the fiercely independent RIA space learn something from the fiercely independent medical space?

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

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Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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About National Compliance Services, Inc.

Want, Need or Risk Reduction Mechanism?
Staff Reporters

cmp-logo6

As readers and subscribers to the Medical Executive Post, and our related print periodicals, dictionaries and books are aware, choosing the right financial consulting firm, or consultant, is always a challenging task www.HealthCareFinancials.com Today, this is true more than ever, given the financial meltdown and the all too obvious shenanigans of Wall Street www.HealthDictionarySeries.com Lay and physician investors alike are affected; along with related financial advisors of all stripes, degrees and designations [spurious or more credible] www.MedicalBusinessAdvisors.com

National Compliance Services

According to the National Compliance Services, Inc. [NCS] website, an experienced team of customer-oriented professionals is in place that strives to meet personal and corporate compliance needs so that clients can focus on areas of expertise www.NCSonline.com

A Protean Focus

NCS operates in the financial compliance and regulatory services industry. Its strength may be in providing efficient, and reasonably priced products and services for many different sub-arenas, such as: investment and financial advisors, hedge and mutual funds, stock-brokers and broker-dealers. Their customized services are designed to structure a compliance program that is appropriate for any individual, or firm’s unique regulatory needs. NCS works to ensure compliance with applicable federal and/or state rules and regulations.

Range of Products and Services

NCS has offered its personalized services to more than 6,000 clients, both domestically and internationally. Their consultants include former regulatory examiners, accountants, attorneys, and other individuals with extensive hands-on industry experience.

Verification Services

NCS also offers a standard or customized line of verification services to Mutual Funds, Hedge Funds, Custodians, Broker-Dealers, Investment Advisers, and Third-Party Vendors. Verification services can be customized to include any or all of the following:

  • Firm Registration/Notice Filing with the Proper Jurisdiction(s)
  • Adviser Representative Registration(s)
  • Adviser Representative Degree(s) or Professional Designation(s)
  • Firm Reported Disciplinary History
  • Adviser Representative Reported Disciplinary History
  • Proper Registration of Solicitors
  • Proper Registration of Wholesalers and Third-Party Vendors
  • Bank Background and Activity Reports, and
  • OFAC Checks, etc.

Assessment

Moreover, claims of verification for over 15,000 Registered Investment Advisers, and Investment Adviser Representatives, seem plausible. For example, NCS recently contacted www.CertifiMedicalPlanner.com to verify the good-standing of a member and charter-holder.

Contact Info:

For further information, please contact:

Alex Aghyarian
National Compliance Services, Inc
Verification Technician
Phone: 561.330.7645 ext 302 and Fax: 561.330.7044
aaghyarian@ncsonline.com

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Verification in most any space is worthwhile of course; but is membership in a vague or nebulous organization helpful or harmful to the uninitiated?

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

Our Other Print Books and Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Protecting Your Pension

A Book Report for “Dummies”

Staff Reportersnyse

According to one review, this aptly-titled book Protecting Your Pension for Dummies [Wiley-July 2007, 978-0-470-10213] has proven to be prophetic in its early warnings against money-hungry financial advisors [FAs].

Watch the “Advisors”

The text, written by pension litigators Robert D. Gary and Jori Bloom Naegele, cautioned about hidden fees for financial advisors, lack of benchmarks for financial performance, inappropriate and risky investments, and heavily weighted distribution of plan investments in shaky company stock; etc. In other words, the traditional industry “bar of suitability”, is both ethically and legally low.

Assessment

For example, did you know that the financial services [read “sales”] industry has no definition for the term “financial advisor?”  According to one source, it can be a “butcher, baker or candle-stick maker.” Of course, there are many fine financial services salesmen and consultants “out-there”. But, finding one may be difficult. And, does it not seem that an increasingly number of pundits, like the authors of this book, and others, suggest their numbers are fewer and farther between than the industry itself suggests?

Terms: www.HealthDictionarySeries.com

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Are medical professionals, and the lay public, finally realizing that far too many of these FAs [read stock-brokers] are not fiduciaries working on your behalf; do not have to disclose conflicts of interest, and do not put client interests first?

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

Our Other Print Books and Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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About RRs and RIAs

Understanding Financial Sales “Titles”

Dr. David Edward Marcinko; MBA, CMP™dr-david-marcinko1

Registered Representative

A retail or discount stock broker, regardless of compensation schedule, is also known as a registered representative [RR]. Other names include financial advisor, financial consultant, financial planner, Vice President, Wealth Manager, etc. Typically, the less than rigorous national test known as a Series #7 (General Securities License) test, and state specific Series #63 license is needed, along with Securities Exchange Commission (SEC) registration through the National Association of Securities Dealers (NASD) to become a stockbroker [now Financial Industry Regulatory Authority – FINRA]. Since a commission may be involved, and performance based incentives are allowed, be aware of costs.

Registered Investment Advisor

This securities license, obtained after passing the Series # 65 examination, allows the designee to charge for giving “unbiased” securities advice on retirement plans and portfolio management, although not necessarily sell securities or insurance products. An RIA is also usually a fiduciary, while a RR, financial consultant or stockbroker is not.

About FINRA BrokerCheck

FINRA BrokerCheck is a free online tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. It should be the first-line resource when a physician or other investor is choosing whether to do business with a particular broker or brokerage firm www.FINRA.org

 

Features of FINRA BrokerCheck include:

Assessment

Do you seek “professional” assistance with your investing endeavors, or are you a DIY physician-investor?

Conclusion

And so, as a former holder of all the above titles, your thoughts and comments on this Medical Executive-Post are appreciated.  

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

Our Other Print Books and Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Alphabet Soup: Financial Designations & Certificates

Join Our Mailing List 

financial-designationsjuly

July 2008:

AUTHORS: Dr. David Edward Marcinko; MBA, CMP™ and Hope Rachel Hetico; RN, MHA, CMP™

POSITION: Publisher-in-Chief, and Managing Editor of the Executive-Post, respectively.

dem26

TOPIC: Financial Designations and Certifications [Alphabet Soup of Industry Obfuscation and Self-Promotion, or Real Gravitas – You Decide?]

EXCERPT: “Until recently, most financial advisors were regulated by the NASD, the National Association of Securities Dealers. Now the Financial Industry Regulatory Authority or FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. It is a self-regulatory agency comprised of the nation’s brokerage firms. Upon completion of a required exam the FINRA will issue a variety of licenses. The most common are the Series 6, 7, and 24.

The Series 6 is essentially a license to sell packaged products, namely mutual funds. It is most commonly held by insurance agents and bank representatives. It is considered a very easy test. Holding such a license allows the holder to collect commission income through its member firm.

The Series 7 exam is a bit more difficult and includes issues relating to individual securities such as stocks, bonds and limited partnership interests. The pass rate is lower than the Series 6. The probable culprit is the extensive questioning on margin and options, topics most are unfamiliar with prior to entering the securities business.

The Series 24 covers issues of compliance and supervision and is required of Branch Managers of brokerage firms. All registered representatives (the proper name for a broker) must be supervised by someone with a Series 24, also known as a principal’s license.

Checking the background of a registered representative, a branch manager or a member firm is easily done through NASD and/or FINRA Regulation, Inc. NASDR/FINRA maintains the Central Registration Depository (CRD). The CRD can be checked for a description of a disclosed event by phone or by Internet. One should request information on an advisor’s firm as well as the individual. A reputable advisor at a disreputable firm has its own set of potentially dangerous implications.

Regardless of the above, these tests produce licenses to sell financial products. They are not educational achievements. There is virtually no academic barrier to entry for them. Stock-brokers today – hate the term – and prefer “financial advisor”; yet the term has no real meaning other than as a sales license.

Some are college graduates, and beyond; while some other experts argue that too many are not!”

Hence, the need to “raise the bar to fiduciary accountability with deep knowledge of healthcare modernity.”

For more info: http://www.CertifiedMedicalPlanner.org

READ JULY HERE: financial-designationsjuly

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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