Photo by Ken Sakamoto, Star-Bulletin
Harry KasanowPlanning the
payments on paradise
A nationally recognized
By Russ Lynch
isle adviser says financial planning is
tougher—and more crucial—in Hawaii
Star-BulletinPLANNING for a safe financial future is probably more important in Hawaii than anywhere else because it is so hard to hang on to money in the high-cost islands, says Harry Kasanow. Kasanow, himself a professional in the financial advice field, says people should carefully interview prospective financial advisers.
"I suggest to people that they take the interview as seriously as they would a heart surgeon. This person is going to operate on their finances," he said.
They should start with nationally recognized financial planners' associations that allow only qualified practitioners to be members. Such associations will forward a list of about five names of members in their area, and accompany it with a list of questions the client should ask.
Then it's interview time. Kasanow, who has a home office in Manoa and was recently recognized by Worth magazine as one of the top 250 financial advisers in the country, says people should always talk to more than just one adviser.
The relationship will be so close, if it going to work, that "bedside manner" has a lot to do with it, too. If you're aren't completely comfortable with the adviser you're considering, find someone else, he said.
Another way is personal referrals by close friends or family members who have done well with their financial advisers.
There's a lot at stake, Kasanow said in an interview, particularly in Hawaii where it is hard enough to make ends meet day to day, let alone put something away for the future as well.
"Predominantly the problem lies in being able to assess how much money they'll need to accomplish specific tasks, such as how much will they need to retire on.
"How much money will I need if I want to send my children to Punahou or Iolani? There's a huge concern here about the quality of public education. People look to private schools. There's an enormous fiscal responsibility," he said, noting tuition running around $9,000 a year.
And what if they want to go away to college after that? Another $20,000 a year or more.
Kasanow said many people also have to plan to take care of their parents as well as themselves.
Kasanow's first push when he takes on a client is toward savings.
"We demand of our clients that they must save between 10 and 20 percent of their gross income every year, before they take their taxes out," he said.
Kasanow likes to tell the story of a baby boomer couple, making a total of $300,000 a year, that managed to put away $14,000. Then they wanted to use it for a nice family trip to Europe.
"I said 'No.' I wouldn't take them if they're going to spend their money. I put my foot and down and said, 'No you can't,'" he said. He remembers going to the house and being introduced to their three sons as the financial adviser that said they couldn't go to Europe.
"Now, three years later, they've saved $77,000," he said.
After pushing savings, Kasanow works with the clients to develop a reasonable budget, to map out how they spend their money.
"They have to be serious about letting me assess what they have to work with and how we're going to work with it," he said.
The next step is to put absolutely the maximum allowed into 401(k) employee savings plans at work -- 403(b) plans if they're public employees -- or Keogh plans for the self-employed.
Next, establish a "cash reserve vehicle" in the form of a tax-free (or taxable, depending on the client's tax needs) money market fund, something that can be borrowed against for the tuition problem that comes up or for other needs.
Investments in individual stocks aren't wise for most people, who don't have the time or inclination to track their ups and downs, he said.
Kasanow finds it best to rely on well-managed mutual funds. He concentrates on who the managers are, rather than the name of the fund. Funds perform differently under different managers and if a manager is good, Kasanow likes to switch when the manager moves.
Financial planners -- although Kasanow prefers the term individual investment counsel -- assess more than just income.
How much capital do the clients have? How's their cash flow? How are they handling their taxes? What kind of investment portfolio do they have and how well is it working? How well are they protected, by insurance for example, for liabilities and death?
When do they want to retire and how do they want to live when they retire? And last but not least, what do they want to happen to their assets after they die?
Kasanow's firm charges a flat fee, $2,000 to $5,000 depending on the challenges, to set up a financial plan. Once the plan is in place, the clients get four quarterly reviews and an annual review, in which he collects new information and revises the plan. For half the first fee they paid, each year they'll get a revised plan.
Kasanow began studying financial planning after realizing that his career teaching gifted students in grade school was never going to get him more than the $20,000 a year he was making. He moved to Hawaii in 1984.
The next year he started work with American Express Financial Advisers as a certified financial planner. He stayed there until 1994, when he started his own firm, Kasanow & Associates.
Where to call:
These national organizations, with toll-free numbers, will help you select a qualified, screened professional to provide personal financial advice:
International Association for Financial Planning: 1-800-945-IAFP (1-800-945-4237)
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