Page 3 Profile
Beth Gamel, CPA, PFS
Total planning
by Carolyn S. Ellis
Beth Gamel is co-founder and executive vice president of Pillar Financial Advisors in Waltham, Mass., claimed to be the oldest independent, fee-only financial planning firm in Boston continuously owned by its founding partners. The firm provides comprehensive financial planning and investment consulting services exclusively to the high net worth market. Gamel's work has been recognized by Worth Magazine, the American Institute of Certified Public Accountants (AICPA), and the Boston Estate Planning Council. She spoke with L&HA about her career path from CPA to financial advisor, and how that background serves her in today's planning field.
L&HA: How did you make the shift from CPA to wealth management?
BG: I started my career as a CPA in 1980 with Price Waterhouse (now PWC). I was in the tax department and loved the personal tax side, but there was no personal financial planning being done within large CPA firms at that time. After three years I joined a firm that was part of the David L. Babson Company. There in 1984 I met my partner Bill Baldwin, and we started Pillar two years later. I have my PFS (Personal Financial Specialist) designation, exclusively for CPAs who specialize in financial planning.
L&HA: What is the best term for what you do?
BG: I like the term financial planning. I think wealth management is overused and frequently not accurately used. When I speak to groups, often everybody in the room defines himself as a wealth manager, ranging from those with a $1 million minimum to those running family offices with $100-million families. I prefer the old-fashioned term that covers a broad range, including estate planning, tax planning, investment advice, and retirement planning.
L&HA: I saw you quoted in The Wall Street Journal this summer about the importance of valuing heirlooms in estate planning.
BG:There are interesting things you can do with heirlooms - leave them in your estate, give them to charity, or set up a charitable entity and sell assets while you are alive. It's really important for family members to have a conversation about what their heirs think is important or valuable. You would be surprised at what certain family members are attached to and what they don't care about. You may have been an avid collector of baseball cards, but you might find your family members would be happier if you sold them and that is their intention after you pass away.
If that's the case someone might think about how to deal with that asset creatively during their lifetime, because collectibles when sold are taxed at a 28 percent capital gains rate, not the current long-term capital gains rate of 15 percent. A CRUT, a Charitable Remainder Unitrust, can provide you with income during your lifetime with the remaining assets going to charity at your death.
L&HA: How often are objects like art and jewelry part of estate planning?
BG: For most people, heirlooms are modest. But more likely than not, wealthier individuals with estates north of $30 to 50 million are collectors of something or they have something of value passed down through the family, like silver and china or art work. These things can be a fairly emotional topic, so it's important to have a conversation early.
L&HA: What is the hottest issue in estate planning today?
BG: The hottest issue is not knowing what the estate laws are going to be. We're in an odd year with no estate tax, and if nothing happens in Congress we have a sunset provision where we go back to estate rules as they applied prior to 2003. These were pretty onerous, taxable estates above $1 million and a top tax rate of 55 percent. Yet this year if somebody dies they have absolutely no estate tax and there's a 35 percent rate on gifts. What do we tell clients? I thought by the end of last year we would have had a new tax bill that would have made permanent the estate tax rules as they applied in 2009, which was a $3.5 million exemption and a 45 percent highest tax rate, but that didn't happen.
I am seeing some clients, in consultation with their attorneys, actually considering making taxable gifts this year because the rate is 35 percent. The gift tax exemption of $1 million has never changed. Because it's so late in the year, most people think that even if Congress passes something it would be difficult to make it retroactive to the beginning of the year. Normally people wouldn't be anxious to make taxable gifts, but it could be better to take action while we are in this repeal period and the gift tax is 35 percent, so long as the client knows there is a risk, if a bill passes, of being taxed at a higher rate.
L&HA: You were recognized by Worth Magazine as one of the best financial planners in the U. S. six consecutive times and by the Boston Estate Planning Council as 2010 Estate Planner of the Year. What is the significance of these honors?
BG: They are both very lovely and humbling. It was a huge honor to make it onto the Worth list. The magazine was very well read so it was a great source of new business.
The BEPC Estate Planner award is a different kind of honor, because it's people who know you personally, that you have worked with in an organization and whom you respect and value, that nominate and vote for you. That your peers think so highly of you is just staggering. It was awesome to go to a fabulous dinner for 400 people and have my family there, all my staff, and some very dear friends and to be able to make a speech and talk about the influencers in my life.
L&HA: You were also honored by AICPA with its Personal Financial Planner Distinguished Service Award in 2009. One of the things you have done with AICPA is to promote financial literacy. Tell us about these efforts.
BG: In 2003 the AICPA established a financial literacy initiative. On that initial commission I really "got religion" about financial literacy. AICPA built a website for their campaign, 360 Degrees of Financial Literacy, for all ages and stages of life, and I had the opportunity to speak to many groups around the country who could benefit from financial basics.
L&HA: Can you give us some examples of groups you have helped?
BG: In 2008 I spoke to 200 women from the Chamber of Commerce in Raleigh-Durham, N.C. These were women at all levels, from administrative assistants to lawyers and heads of medical organizations. I walked them through the basics, estate planning, insurance needs, budgeting, cash flow planning. What amazed me was the number of questions I got about credit card debt. One beautifully dressed woman who had worked for the state and federal government told me privately that she had $45,000 in credit card debt. I was blown away. If you had seen her, you would never have suspected that she could have any financial difficulties whatsoever.
L&HA: What brought you to this work?
BG: Financial planning was the perfect marriage of my two backgrounds. As an undergraduate I majored in sociology and intended to become a social worker. Then I got an MBA and became a CPA. I have capability and knowledge in the numbers area and understanding the tax laws and an affinity for helping people.