Protecting Clients from Fraud, Incompetence and Scams

by Lance Wallach

Overview

Every financial expert out there knows that bad faith and bad planning can take down even the biggest firms, wiping out billions of dollars of value in an instant. Whether it's internal fraud, a scammer, or an incompetent planner that takes your client's cash, the bottom line is: that money is gone and the loss should have been prevented.

Filled with authoritative advice from financial expert Lance Wallach, Protecting Clients from Fraud, Incompetence, and Scams equips you as an accountant, attorney, or financial planner with the weaponry you need to detect bad investments before they happen and protect your clients' wealth—as well as your own.

Sharp and savvy in its frank, often humorous, and authoritative examination of financial fraud and mismanagement, you'll learn about the dysfunctional sectors in the financial industry and:

• Protecting your retirement assets

• Asset protection basics

• Shifting the risk equation: insurance maneuvers

• Reevaluating existing insurance

• What financial advisors and insurance agents "forget" to tell their clients

• The truth about variable annuities

• What you must know about life settlements

• The smart way to approach college funding

The news for the past two years has been filled with gloom and dangers: swindles, Bernie Madoff, rip-offs, and the collapse of Bear Stearns and Lehman Brothers. But the party's over, and with that era done, it's more important than ever for you to perform due diligence on all financial maneuvers affecting the money you oversee and provide your clients with assurance in the form of practical solutions for risk and asset management.

A pragmatic blueprint for identifying trouble spots you can expect and immediately useful solutions, Protecting Clients from Fraud, Incompetence, and Scams equips you with the resources, strategies, and tools you need to effectively protect your clients from frauds and financial scammers.

Product Details

ISBN-13:	9780470593929
Publisher:	Wiley
Publication date:	02/22/2010
Sold by:	JOHN WILEY & SONS
Format:	eBook
Pages:	240
File size:	731 KB

About the Author

LANCE WALLACH, CLU, CHFC, is a leading speaker on accounting and taxation topics and the author of numerous AICPA CPE exam publications. In addition to developing CPE courses, he is also a member of the AICPA faculty of teaching professionals, and has been featured in the Wall Street Journal, the New York Times, Bloomberg Financial News, NBC, National Public Radio's All Things Considered, and other radio talk shows. Mr. Wallach is listed in Who's Who in Finance and Business.

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Table of Contents

Acknowledgments ix

Introduction: Every Accountant and Attorney Should Read This Book xiii

Chapter 1 Meltdown 1

The Party's Over 2

We All Know the Result 3

Grim Statistics 4

Retirement Plans and the IRS 8

Summary 12

Chapter 2 Everyone Needs a Family Office 15

Why a Family Office? 15

Retaining a Firm 18

The Family Office Advantage 19

Summary 20

Chapter 3 Protect Your (Retirement) Assets 21

The Fiduciary Duty 21

Documenting a Process 22

Plan Options/Simple IRA 23

You Cannot Save Enough 24

Another Option-The 412(e)(3) 25

The Cash-Balance Plan 26

Summary 28

Chapter 4 How Much Did You Lose Last Year? 29

Basic Financial Strategies Quiz 29

Estate and Financial Planning 30

Life Insurance 31

Succession Planning 31

The Buy-Sell 32

Medical Insurance 32

Asset Protection 32

VEBA 33

Other Post-Employment Benefits 33

OPEB Cost 34

VEBA Plan Benefits 37

Taxes 38

Retirement 39

Legislative Changes 39

HSA/HRA 39

412(e) 40

Audits 40

Shelters 41

6707A 43

Captives 50

Summary 50

Chapter 5 Self-Defense 51

Captive Insurance 52

Basics 52

Sharing 53

Caveats 54

Summary 55

Chapter 6 Asset Protection Basics 57

Asset Protection-Necessity, Not Luxury 57

Who Needs Asset Protection? 58

Separating Ownership from Control 60

What Is an Asset Protection Plan? 61

What Is a Trust? 62

How Does a trust Work? 63

How Is a Trust Used? 63

Offshore Trusts 65

Asset Protection FAQs 67

Summary 70

Chapter 7 Shifting the Risk Equation-Insurance Maneuvers 73

Key Employee Insurance 73

LTCi for the Business Owner 76

Life Insurance for Business Continuation 80

Summary 81

Chapter 8 Reevaluating Existing Insurance 83

Evaluation or Audit 83

Consultative Leverage 87

Summary 89

Chapter 9 What Financial Advisors "Forget" to Tell Their Clients 91

Fiduciary Duty 93

Summary 95

Chapter 10 The Truth About Variable Annuities 97

Variable Annuity Components 98

Mortality and Expense Charges 99

Guarantees 100

Summary 100

Chapter 11 What Life Insurance Agents "Forget" to Tell Their Clients 103

Questionable Aspirations 103

Coverage Needs 104

Estate Taxes 104

The ILIT 106

Summary 107

Chapter 12 What You Must Know About Life Settlements 109

Life Settlements 109

Industry Regulation and Compliance 111

Licensing and Reporting 112

Compensation 113

Compensation Abuse 114

Suitability 115

Best Execution and Due Diligence 118

Fraud Prevention 119

STOLI 122

Evaluation and Processing 123

Tax Treatment 126

Case Studies 133

Caveat Venditor 138

Summary 139

Chapter 13 What Health Insurance Agents "Forget" to Tell Their Clients 143

Out of Control Costs 143

Small Business at Risk 146

The Risk of On-Site Medical Clinics 151

Using an HSA for Your Personal Retirement 152

Creating an Employee Retirement Vehicle 153

IRS Form 8889 (HSA) 153

More Effective Strategy 154

Aggregate Cap Planning 155

HRA 156

Managing General Underwriter 158

Summary 160

Chapter 14 College Funding Strategies and Solutions 163

The Traditional Approach 163

Good Intentions, Disastrous Consequences 166

Traditional Vehicles 168

Real Life 180

Summary 187

Chapter 15 Two Alternative Investments for Financial Independence 189

The Tertiary Market 190

History 191

Risk 192

Reward 194

Another Alternative 194

O&G Advantages 195

Summary 197

Chapter 16 Avoiding Fraud: Small Business Case Study 199

Introduction 199

Suspicion 200

Investigation 201

Fraud 202

Dismissal and Prosecution 204

New Mechanisms 205

Summary 206

Appendix A Best of the Best 207

Insurance Advisors 207

Investment Advisors 207

Law 209

Business Services 210

Epilogue 213

About the Author 215

About the Contributors 217

Mark Boehm, MBA, CWPP 217

Aaron Skloff, AJF, CFA, MBA 217

Carl Allen, III 218

Index 219