small business journal march

SMALL BUSINESSJOURNAL

MARCH 2015

BUSINESS KNOWLEDGE. BUSINESS OPPORTUNITY. BUSINESS ACCESS.

Jonathan BlauFusion Family Wealth

SUCCESSFUL INVESTING GENERALLY REQUIRES ONE SIMPLE PRINCIPLE:

BEHAVE

THE RECENT AND FAR-REACHING NEW YORK STATE

NOT-FOR-PROFIT REVITALIZATION ACT (“NPRA”)

Ethan Kahn, CPA and Partner

FEATURELEVERAGED FUNDS OF FUNDS:

A STRATEGY TO ADDRESS TODAY’S MARKET CHALLENGES

ABRAHAM BIDERMAN AND HOWARD HOROWITZ

S M A L L B U S I N E S S J O U R N A L2

M A R C H 2 0 1 5 3

INSIDE

Buy vs. Lease: An Evolving Issue for a Successful Small Business and Opportunities for Financing Under the SBA 504 Loan Program . . . . . . . . . . . . . . . . . . 6LEONARD GRUNSTEIN

Successful Investing Generally Requires One Simple Principle: Behave . . . . . . . . . . . . . . 12JONATHAN R. BLAU,

Leveraged Funds of Funds: A Strategy To Address Today’s Market Challenges . . . . . . . . . . . . . . . . . . . . 18ABRAHAM BIDERMAN & HOWARD HOROWITZ

The “Uncertain” Terrain of Estate and Tax Planning . . 22ADAM KATZ

Rate Way Vs. Right Way - Tips to obtaining mortgage financing. . . . . . . . . . . . . . . . . . . . . . . . . . 27NICK LEIMAN & ISAAC GLUCK

Analyzing a Campaign that Generated $100 Million . . 32YITZCHOK SAFTLAS,

The Buy . . . . . . . . . . . . . . . . . . . . . . . . . . 36JACOB AKERMAN,

The recent and far-reaching New York State Not-for-Profit Revitalization Act (“NPRA”) . . . . . . . . . . . . . . . 38ETHAN KAHN

FEATURE

LEVERAGED FUNDS OF FUNDS: A STRATEGY TO ADDRESS TODAY’S MARKET CHALLENGESABRAHAM BIDERMAN & HOWARD HOROWITZ

PAGE 18

Equity markets are teetering at record highs. Bonds may well be heading for trouble if interest rates rise later this

year. What’s an investor to do?

Leveraged funds of hedge funds offer an excellent way to thread the needle. Unlevered (read: plain vanilla) funds of funds, with their second layer of fees and middling returns, have fallen from their once lofty

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M A R C H 2 0 1 5 5

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The ability to rent space is a decided advantage for most entrepreneurs opening a new small business.

After all, why invest limited capital in order to create or own space, for the business to occupy, when the space can be rented. Moreover, the funds are usually better deployed in furthering sales and bolstering the income side of the equation. This is especially so during the early stages

of a business, when getting product or services to market, growing sales and obtaining market share are a priority.

As time goes on and the business matures, the question of buy vs. lease space becomes more poignant. This can

occur for a variety of reasons. For example, when the initial term of a lease expires, the prevailing market rent may be significantly higher than the rent at the inception of the lease. There may be other intervening circumstances, such as a landlord’s desire to reposition the space. As a result, the existing space my not be available to re-lease.

The shock of a material change in the rent can disrupt the profitability of an otherwise successful small business. Many businesses can’t take the stress. This includes small retail, professional and other service firms. Moreover, relocation within the immediate vicinity may not be an option. There may not be any other available space that is satisfactory. In any event, rents may also have increased throughout the area. All too often, otherwise successful

BY: Leonard

GrunsteinFinancial Executive

Buy vs. Lease: An Evolving Issue for a Successful Small Business and Opportunities for Financing Under the SBA 504 Loan Program

M A R C H 2 0 1 5 7

local businesses are forced to close because of these stresses.

Growing up in a family that owned a retail grocery business, I felt the stresses at lease renewal time. Sitting next to my dad, negotiating the terms of a lease renewal for the store, I was acutely aware of the pressure he was under. Moving the business to another locale was not a genuine option. It was make or break time. We had to negotiate a rent acceptable to the landlord, but which allowed the business to survive. It was no mean achievement. The pressure was redoubled when it came time to sell the business. Not only was landlord’s consent required for an assignment of the lease; the new buyer reasonably desired a lease extension. There were only a few years remaining to the existing lease term. I negotiated the deal on behalf of my dad. It required an immediate rent increase and fortunately the buyer was willing to accept it without an adjustment to the purchase price of the business. I later learned that when the extended lease came up for renewal, the landlord was unwilling to renew. Instead, the store space, as well as, the other retail spaces in the complex were vacated and repositioned for more upscale occupancy. Needless to say, forced out of its space, the grocery store business no longer exists. The ability to buy the space might have saved this small local business.

Real estate can also be a wonderful outlet for diversification of investment by a successful entrepreneur. In the early stages of a business, there is often little or no choice but to reinvest the net income in order to grow the business. However, as time goes on and a successful business matures, the needs of the business itself may not be as compelling. Finding investment opportunities for surplus monies is not an easy task. Entrepreneurs, who have successfully overcome all manner of challenges on their own, in establishing their small businesses, sometimes find it difficult passively to park their hard earned cash with a stranger. Often, the amount available for investment is just not sufficient to attract the attention of a major investment firm. It’s easy to make a mistake and there are genuine concerns about who to invest with and in what investments.

The prospect of making an investment in the real estate the business occupies can be interesting from a number of perspectives. A successful retail businessman knows a great deal about the trends in his particular neighborhood.

From a real estate point of view, the outlook for local retail rentals is often derivative of prospects for the surrounding residential community. A community in flux usually has a corresponding effect on the local retail economy. Thus as a neighborhood undergoes gentrification and becomes more upscale, so, usually, does the retail. Higher retail rents are generally associated with these positive changes. On the other hand, urban blight originating in the residential sector also has a negative effect on the local retail in the area.

Industrial uses in urban settings have also experienced encroachments by so-called higher and better uses, such as office and residential. The growth of cities and the lack of land make for a heady combination when it comes to adaptively reusing existing structures and raising the

rents. The result is to squeeze out small industrial tenants.

A savvy small businessman often has a keen appreciation of these local trends and is well positioned to take advantage of opportunities to acquire real estate in the emerging area where his or her business is located. I have often heard tales of “if only”. Imagine “if only I had bought the building in Soho [or Tribeca], where the factory was located, what wealth would have been generated? Now the building is a luxury condo.” Well those trends

originated thirty or more years ago. But there are newer opportunities that have appeared. Consider old industrial areas like Williamsburg North that are in the midst of being redeveloped

into high-end housing. This began approximately a

decade ago. What is the next burgeoning area?

A local small businessman often has knowledge and information that could be translated into a realistic investment plan. Nevertheless, owning and operating real estate is a business; not just a passive investment opportunity. It takes more than a good idea, strong heart, gut instinct, hard work and dogged determination. But, those are extremely important ingredients. An individual armed with these attributes can make it in the real estate business, too. The other major elements are money and luck.

Sourcing capital seems to be a perennial problem for most small businesses. The perception of risk in funding

" “...if only I

had bought the

building in Soho

[or Tribeca],

where the factory

was located,

what wealth

would have been

generated?” "


a small vs. a large business is magnified. This is so during the startup phase and even after the business reaches sustained profitability. A loan to a small business is viewed as inherently more risky than a similar loan, meeting the same objective underwriting criteria, to a large one. There is also the matter of banks not being genuinely interested in making small loans. The time spent underwriting and closing a small loan with a small business borrower is at least the same as that required for a large loan and often significantly more. Smaller businesses don’t have the accounting and legal personnel needed to expedite the processing of a loan. They may have to bring on outside help just to meet the documentary and other typical demands of a bank lender. This can range from basic legal documentation for the entity to full audited statements for the current and a number of prior years of operation. A small business may not be able to accommodate these requirements at a reasonable cost commensurate with the financing requested or within a reasonable time frame. It’s not the way small business functions in the usual course. There is often an apparent clash of cultures. Is it any wonder that banks shy away from making small loans to small businesses, when they can spend the same or less time, with less effort, pursuing large loans to large businesses? When it comes to bonus time, at the bank, it’s about the dollar volume of loans that close and pay interest. It’s not about the absolute number of individual loans closed. It is also not about the amount of time spent working on applications for loans that don’t end up closing.

I remember well facing these very issues in my first bank approximately 20 years ago. The bank specialized in making small multi-family and commercial mortgage loans. This included mortgage loan to small businessmen to purchase the buildings in which their businesses were located. We found that there was a healthy demand for this financial product and very little supply. We underwrote the smaller loans just like the larger ones. Thus, we analyzed the real estate that was to be the security for the loan on its own. The fact that the borrower was to be the primary tenant was not deemed a plus from a credit perspective. However, it was perceived that the borrower was less likely to default in paying the loan so as not to lose both

the property and the business. Nevertheless, the tenant was not what would be considered a credit tenant. Our primary concern from an underwriting perspective was the marketability of the property, the prevailing market rents in the area and demand for the space. It was critical that the rent needed to service the mortgage debt not exceed the market rent. Of course, the borrower had to be able to afford the rent. However, like all well underwritten real estate mortgage loans, it was not just about the particular tenant. If the tenant was no longer there and had to be replaced, then the property still had to be able to carry the mortgage. Thus, the prevailing market rents needed to be sufficient to support payment of debt service under the mortgage loan. There also had to be a determination made that there was adequate demand by tenants for the

space, in the ordinary course. The bank did well financially because it charged a little more, when compared to large mortgage loans at the major banks. The borrowers were willing to pay a little more because there were few, if any, bank lenders interested in making these loans and the next tier of non-bank lender charged exceedingly higher rates.

Small mortgage loans made by my bank included one to the owner of a retail business for the purpose of acquiring the building in which the business was located. The business occupied the main floor and there were a few residential apartments above. I look back at that loan and can’t help but smile at the prescience of the borrower. The

area has benefited from gentrification and the property is worth many times the original purchase price. Rents have

climbed dramatically in the area and are likely unaffordable for many of the local users of almost two decades ago. The borrower had a gut instinct that proved to be correct. While we at the bank shared that view and admired the borrower’s entrepreneurial spirit, nevertheless, our underwriting was based on then existing market conditions. Interestingly, at the time, the loan could not be sourced as a SBA guaranteed loan, because real estate loans were not permitted under the program. But this changed with the enactment of the SBA 504 Loan Program, which was designed to facilitate the making of these kinds of real estate mortgage loans to small businesses. Last year, the SBA adopted regulations to improve access to the 504 Loan Program, as summarized below.

There is also the matter

of banks not being

genuinely interested in

making small loans.

un

M A R C H 2 0 1 5 9

Under the program, a qualifying small business can, in connection with obtaining space for its business, finance the acquisition of land and building. This can include the cost of construction of the building, machinery and equipment, as well as, certain closing and other costs. There are three components to the financing model. It begins with a bank loan, generally, for 50% of the total qualifying project cost. That loan is secured by a first mortgage against the property. A second mortgage loan is obtained through a Certified Development Corporation (a not for profit quasi governmental entity that is approved by the SBA under the program to perform this function). The amount of this loan is, generally, for up to 40% of the total qualifying project cost. This loan is subordinated to the lien of the Bank’s first mortgage against the real estate. It is sourced by way of issuance of debentures that are guaranteed through the SBA. The loans, however, are further limited to a total not exceeding 90% of the appraised value of the property financed, upon completion of the project. For these purposes, the value of the business itself is excluded. The balance of 10% or more is equity provided by the borrower. The CDC loan amount might be lower than 40% and the equity requirement higher than 10%, under certain circumstances, as noted above and described below.

Since the purpose of this SBA program is job creation or retention, the maximum amount of the CDC second loan is, generally, $65,000 per job created or retained. This limit is raised to $100,000 per job, in the case of small manufacturing businesses. The maximum amount of this component of the overall financing is $5 million, generally. Small manufacturers can obtain up to $5.5 million. The per job limitation on the SBA loan amount can be waived, if the borrower satisfies certain public policy criteria. These include being a part of a qualifying business district revitalization or the expansion of a qualified minority; women or veteran controlled or owned small business. Other examples of public policy goals include expansion of exports, aiding rural development, re-tooling , installing robotics and/or otherwise modernizing so as to better be able to compete

with imports, restructuring because of federally mandated standards or policies and changes necessitated by federal budget cutbacks. Another possibility is obtaining LEED certification, which involves providing a third party expert report that documents the commitment to meet the green public policy goals of reducing the small business borrower’s energy consumption by 10% or generate at least 10% renewable energy on site.

The rentable area of an existing building to be financed must be at least 51% occupied by the small business owner. In a new construction project, the small business

owner must occupy at least 60% of the rentable area. There are other restrictions on leasing in a new construction project, as well.

A small business is defined as a for profit business that has tangible net worth that is no greater than $15 million and average net income after taxes of below $5 million per year, for the preceding two years of operation. The small business borrower may be organized as a sole proprietorship, corporation, partnership or limited liability company. New small businesses are defined as those in business for less than two years. The equity component required is raised to 15% in the case of a new business borrower or the purchase of an existing business. The equity requirement is also raised an additional 5%, in the case of the purchase of a special purposes property as defined by the SBA. These include, for example, amusement parks, bowling alleys, car washes, gas stations and service centers, nursing homes, surgery centers and wineries. Thus, a new small business borrower seeking

to finance the purchase of a special use property would be required to provide a 20% equity contribution.

Eligibility under the program is premised on the borrower and its principals not having sufficient financial strength to accomplish the financing without the aid of the SBA. At the same time, the borrower must show that it is able to pay back the loan in accordance with its terms. However, projected income can be used for this purpose.

The borrowers and reporting principals (owning 20% or more of the borrower) are required to submit financial

Under the program,

a qualifying small

business can, in

connection with

obtaining space for its

business, finance the

acquisition of land and

building.


statements and tax returns. The profit and loss statements for the business must be current to within 90 days of the application and include the preceding 3 fiscal years of operating history. An overview and history of the business, as well as a business plan is required to be submitted. The borrower must show why the SBA loan is needed and how it will help the business. Projections are required, which show how the loan can be repaid. In this regard, it should be noted that projected earnings might be sufficient to support the loan, even if the historical earnings are insufficient. The reporting principals are also required to complete and submit the SBA form Statements of Personal History. Disclosures must be made of the ownership and any affiliates of the small business borrower.

In general, no collateral beyond the real estate and machinery and equipment financed is required. However, if this is insufficient, then additional collateral may be required to be posted to secure the loan or the loan amount may be reduced and additional equity required. This can also occur if the loan is viewed as riskier, the business is a start-up or the underwritten cash flow is insufficient to support the debt. Personal guarantees of the reporting principals are required. In addition, if the bank requires other guarantors in support of the bank mortgage loan, then they must similarly guaranty the CDC loan. Besides the loan documents and mortgage liens against the property, the underwriting requirements include a qualified third party appraisal, environmental report and title insurance, satisfactory to the lenders. Typically, key man life insurance is also required. This requirement may be waived if there is a formal succession plan in place and the borrower can prove there would be a seamless transition. However, it is likely that the individuals designated to take over the business would also have to guarantee the loan. This requirement may make this alternative impractical.

As to the land and building, the CDC loan component is typically provided on a term loan basis. CDC loans are typically written for a term of 10 or 20 years. The term of the bank loan portion of the financing is a matter for negotiation with the bank. It is typically from 7-10 years. Machinery and equipment having at least a useful life of 10 years can be financed as a part of the overall financing; but this component of the financed amount can only be financed over a maximum of 10 years. The SBA and CDC fees total approximately 3% of the loan amount. There is also an annual fee that is included as a part of the monthly

debt service. The CDC loan provides for prepayment penalties. The bank loan closing fees and any prepayment penalties are a part of the terms and conditions negotiated between the parties.

The proceeds of a 504 loan can only be used for prescribed purposes as noted above. They cannot be used for working capital or inventory. Consolidating, repaying or refinancing debt, generally, is also not a permitted use of proceeds. There is a limited exception for refinancing existing mortgage debt against the real estate occupied by the business, in connection with an expansion of the business. However, the qualified total project cost to be financed under the 504 Loan Program must be at least twice the amount of the mortgage debt to be refinanced. It should be noted that the proceeds of a 504 financing may not be used for speculation or investment in rental real estate, generally. The property to be financed must be occupied by the small business borrower, as summarized above.

The SBA 504 Loan Program addresses an important need in the market place. It helps provide commercial real estate mortgage financing to small businesses at competitive rates. There are a number of banks that have participated in the SBA program. The names are available online. Reference can be made to the SBA website at SBA.gov to find a CDC servicing a particular locale. Contacting a local CDC is a traditional way of initiating the loan process. Pre-approval is a possibility. This can be a very helpful, in terms of tying up a real estate opportunity. It also provides the comfort of knowing that a 504 loan is a real possibility. Remember, though, there are a number of closing conditions and it’s not closed until title passes and the loan is funded. Having the right team of experienced experts on board can help facilitate the process.

Leonard Grunstein has successfully represented a number of promi-nent clients over the years, including, a number of banks and other institutional lenders. He also founded a federal savings bank and then national bank, where he served as Chairman for a number of years. He was also the Chairman of Israel Discount Bank of New York.Mr. Grunstein has published articles on various topics in real estate and finance, including in The Banking Law Journal, The Real Estate Finance Journal, the New York Law Journal and other fine publications.

M A R C H 2 0 1 5 11

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The principles of Behavioral Finance are critical for each investor to understand and

incorporate into their investment planning construct in order to maximize the probability of achieving their financial goals and to avoid taking actions that create permanent capital loss.

Two of the most successful investors who have ever lived understood and, in Warren Buffet’s case, still understand that the ability to keep emotions from influencing investment decisions is the single most important factor. According to Buffet, “To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”

Warren Buffet’s mentor, Benjamin Graham said “The investor’s chief problem and even his worst enemy is likely to be himself.”

Sadly, led by the large wire houses (Morgan Stanley, UBS, Merrill Lynch, etc…) and firms like Morningstar, Wall Street’s Marketing Machine creates a culture designed

to exploit -- rather than to address to the investor’s benefit -- the innate psychologically-driven tendencies that cause investors to maintain a short-term focus, chase performance, and abandon long-term planning efforts by attributing far too much meaning to the most recent performance trends and current events.

As we crave order and certainty, our minds are wired to constantly look for patterns. Few things are more elusive in the global financial marketplace than predictable patterns! As a result, one of the most pervasive and dangerous cognitive decision drivers is recency bias. Those with recency bias prominently recall and/or emphasize recent events and then extrapolate a future predictable long-term pattern where none exists.

Please see the chart below highlighting a Hong Kong elementary school first grade entrance examination. Please take no more than 20 seconds to try and determine which spot number the car is in.

Successful Investing Generally Requires One Simple Principle:

BEHAVE

BY Jonathan R.

Blau, President & CEO,

Fusion Family Wealth

M A R C H 2 0 1 5 13

The majority of people will automatically look for a pattern, which prevents us from exploring a more effective approach. It is almost impossible to resist our brain’s automatic pattern-seeking programming. Please turn the chart upside down and you’ll see that the brain’s default method for problem solving -- seeking a pattern – prevented us from exploring an alternative and simpler approach to finding the answer.

HOW MUCH DO PSYCHOLOGICAL DECISION-DRIVERS COST INVESTORS?

One widely followed study, updated every year since 1984, actually quantifies how much psychological decision-drivers cost investors, and the numbers are staggering.

The Dalbar study 1 illustrates (see Exhibit I)that over the 20 year period illustrated, psychologically decision-driven market timing behaviors cost the average equity investor close to $4 million for every $1 million invested.

Investors should resist the siren call of brokerage firms touting their large equity research capabilities, along with fund companies touting their mutual funds that “outperformed” the S & P 500 index for the past 3 and 5 year periods and those that are rated 5 stars by Morningstar.

All of these messages are often nothing more than results-oriented marketing campaigns designed to take advantage of what the industry knows well – that we

1) Dalbar’s 20th Annual Quantitative Analysis of Investor Behavior 2014 Advisor Edition.

humans are programmed to seek patterns to identify potential dangers and potential opportunities, and that we tend to focus more on recent patterns (“recency effect”) than on longer term patterns. As it relates to investing, the recency effect induces us to believe that, based on recent performance results, we can extrapolate a future predictable pattern of returns where none exists. This is why so many investors engage in the “buy high, sell low, repeat until broke” investment pattern. They are forever chasing the elusive dream of persistent out-performance.

Morningstar’s rating system specifically enables fund companies to take advantage of recency bias to the detriment of investors. A fund receives 5 stars as a result of having recently outperformed a majority of funds in its category. In other words, the higher star rankings indicate, in most cases, that those particular funds have gotten relatively expensive. The lower star-rated funds now likely represent better relative investment values. Logically, investors should peel some money from the more expensive funds and rebalance into what has become more undervalued. The problem is, most investors do not appreciate the backward looking nature of the star system and they have been led to believe that 5 star funds are “good” and that 1-star funds should be avoided.

A study conducted by Vanguard shows that on average, the opposite is true. Vanguard’s study revealed that for the three years following the year a fund received a 5-star ranking, 39% of such funds outperformed their respective style benchmark. During the same period, close to 50% of funds with the lowest 1-star ranking outperformed! Further the study looked at 36 month excess returns (versus the relevant style benchmarks)

"Psychologically decision-driven market timing behaviors cost the average equity investor close to $4 million for every $1 million

invested."

Exhibit I: 20 Year Anualized Returns

10

7.5

2.5

5

0Equity Funds Fixed Income Funds In�ation S & P 500

S&P 500 & Barclays Aggregate Bond IndexIn�ationEquity & Fixed Income Funds

Barclays Aggregate Bond Index

5.05

0.712.37

9.92

5.74

Exhibit I: 20 Year Anualized Returns

10

7.5

2.5

5

0Equity Funds Fixed Income Funds In�ation S & P 500

S&P 500 & Barclays Aggregate Bond IndexIn�ationEquity & Fixed Income Funds

Barclays Aggregate Bond Index

5.05

0.712.37

9.92

5.74


Exhibit II: Determinants of Portfolio Performance

100%

75%

25%

50%

Asset Allocation Market Timing

Asset AllocationMarket TimingStock SelectionOther

Stock Selection Other

91%

5% 2%2%0%


100%

75%

25%

50%




91%

5% 2%2%0%


100%

75%

25%

50%




91%

5% 2%2%0%

and found that, over time, the top rated mutual funds generated the lowest excess returns while the lowest rated funds generated the highest excess returns.2

WHAT IS AN INVESTOR’S BEST DEFENSE?Investors need to avoid focusing most of their energy

on trying to find stocks or funds that have the best past performance records in hopes of achieving a more “certain” future investment result. The fact is that studies have determined that the asset allocation decision accounts for over 90% of a portfolio’s total value movement, while stock/fund selection accounts for 5% (see Exhibit II).

Similarly, since most actively managed funds do not outperform index funds, investors would be wiser, and likely far better off financially, if they focused most of their energy on developing an asset allocation strategy to reflect their long-term goals, while seeking out an adviser adept at identifying their individual decision-drivers and helping to mitigate the impact of such drivers in order to ensure the highest probability of plan adherence.

Investors should avoid choosing random benchmarks like the S & P 500 or their neighbor’s broker’s performance to measure their success. Using such arbitrary benchmarks tends to lead to unrealistic expectations that are not based on the risk tolerance and objectives of the individual investor. This type of arbitrary benchmarking often leads to inappropriate asset allocation moves and long-term plan abandonment, usually at the worst times.

2) Christopher B. Phillips, CFA & Francis M. Kinniry Jr., CFA – Mutual Fund Ratings and Future Performance – (Vanguard June 2010) http://www.vanguard.com/pdf/icrwmf.pdf.

Helpful benchmarks are generally goal-based and customized. For example, an investor who defines an annual retirement spending need of $300,000 and an anticipated retirement time horizon of 20 years can periodically track whether the recommended plan's likelihood of achieving the goal by measuring periodically how close they are to the balance needed at retirement.

SOME SPECIFIC RULES TO LIVE BY• Avoid frequent portfolio monitoring - Investors

should be most concerned with maximizing the overall level of their wealth over time. Instead, they tend to be preoccupied with monitoring short-term changes in the level of their wealth. This behavior drives them to make decisions that reduce the probability of maximizing long-term wealth.

Frequent monitoring causes us to adjust our portfolio in reaction to what we see, and can have extremely negative implications for the ultimate level of our wealth. This behavior is a result of what is known as myopic loss aversion – when investors focus too heavily on short-term declines and forget how important it is to remain invested for the long-term to grow their wealth. As there are many more daily declines than monthly or annual declines, investors who view their portfolio less frequently will see fewer losing periods and are far more likely to stick to their plan and discipline, increasing the odds of their achieving financial goals.

• Recognize the contradiction in viewing all past market crashes as opportunities, while viewing all future market crashes as risks. As a general rule,

M A R C H 2 0 1 5 15

when we buy investments at lower prices, we should expect a higher future return. Warren Buffet tells investors to be greedy when others are fearful and to be fearful when others are greedy (buy low and sell high). He is a credible source of investment advice.

• Avoid short-term thinking – The market rewards patience and discipline more than any other skill. Those who can focus on the next 5 years, rather than on the next 5 days, are more likely to avoid behaviors that impede their ability to reach financial goals.

• Don’t follow “expert forecasts” – Expert forecasters have been shown to be accurate only 48% of the time, about the same accuracy as a random coin toss. The more confident the expert was in their opinion, the less accurate their forecast was. The trouble is that the more confident experts are listened to or followed the most.

• Avoid outcome bias – Judging whether or not your portfolio has been well diversified or whether you have been advised properly based only on the investment outcome is dangerous. This bias led many investors to hire advisors in the late 90’s who i m p r u d e n t l y chased technology stocks to be able to generate performance statistics in line with the popular indices. The prudency of their “advice” was poor and outcome bias led investors to make costly choices in terms of the advisors they chose to rely upon. Seek out prudent advice and well thought out processes, rules and disciplines.

• Select advisors held to a Fiduciary standard of care -Unfortunately, the large wire house firms – UBS, Morgan Stanley, Merrill Lynch, Wells Fargo, etc… -- are held to a far lower “suitability” standard of care. Conflicted models can tend to take advantage of investor behavior biases – rather than try to help

investors identify and mitigate the impact of biases -- to sell high commission-generating products like annuities. A fee-only Registered Investment Adviser is held to a legal fiduciary standard of care and is required by law to place client interests ahead of their own. Investors likely increase their odds of success by shunning those held only to the lesser suitability standard of care.

Most people wouldn’t hire a doctor who refuses to sign the Hippocratic Oath. Similarly, if an advisor won’t put in writing that he or she will act as a fiduciary, then you may want to think twice about hiring them.

Jonathan is the President and CEO of Fusion Family Wealth, a financial advisory firm he founded in November 2013. B e h a v i o r a l finance is an important aspect of his business and he brings a fresh perspective and clarity on his work with clients. For more than two decades Jonathan has acted as a “trusted advi-sor to trusted advisors” with deep experience working with accounting and law firms on a wide array of financial services capabilities.

Jonathan holds an MBA in Accounting and an MS in taxation. He honed his extensive planning and technical skills during his tenure in the tax and Family Wealth Planning division of a "big 6" accounting firm from 1992 to 1996.He has held a series of wealth management positions in the finan-cial services industry. In recent years, he worked as a senior advisor at Sanford C. Bernstein & Co., Inc., Morgan Stanley and UBS. Jonathan has been a lecturer for the Foundation for Accounting Education (FAE) and the New York State Society of CPAs on the topic of “Taxation of Financial Instruments.”Mr. Blau is also an active board member of the Gurwin Jewish Nursing & Rehabilitation Center.

"Expert forecasters have been shown to be accurate only 48% of the time."


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M A R C H 2 0 1 5 17J A N U A R Y 2 0 1 5 7

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Leveraged Funds of Funds: A Strategy To Address

Today’s Market ChallengesBY

Abraham Biderman and Howard Horowitz

Grand Central Capital Management

M A R C H 2 0 1 5 19

Equity markets are teetering at record highs. Bonds may well be heading for trouble if interest rates rise later

this year. What’s an investor to do?

Leveraged funds of hedge funds offer an excellent way to thread the needle. Unlevered (read: plain vanilla) funds of funds, with their second layer of fees and middling returns, have fallen from their once lofty perch as one-stop diversification vehicles and due diligence departments.

Enter the “leveraged fund of funds,” the next step in the evolution of hedge fund investing.

True, leveraged funds of funds have two layers of fees, but if what you care about is the actual return you get after all fees are deducted, levered funds of funds are worth a serious look. And when it comes to paying for portfolio managers, sometimes the fee justifies the service provided—you wouldn’t hire the cheapest surgeon, would you? So why hire the cheapest portfolio manager?

With a levered fund of funds, the investor gets an

actively managed portfolio of typically 15 to 30 hedge funds, rotated as market conditions change. What you get specifically is a wide variety of market-neutral, arbitrage, and other hedge fund strategies: long/short equities in different industries, market caps, and countries; event driven; merger arbitrage; capital structure arbitrage; convertible bond strategies; floating rate loans; and global macro—among many other approaches and asset classes.

Higher-octane cousins to the original fund of hedge funds, prudently levered funds of funds offer all the diversification, due diligence, access, and safety their unlevered cousins do, but without asking investors to sacrifice superior returns. Indeed, by taking a diverse cluster of carefully selected hedge fund managers and modestly levering them, a levered fund of funds can offer returns as good as or better than single-strategy hedge funds with far less strategy and manager risk. This is because such funds are not wed to any one asset class or hedge fund manager. They can move between and among hedge funds as market conditions require.

A fund of funds, levered perhaps only one time, can also yield more than bonds with far less sensitivity to rising interest rates. At the same time, a levered fund of funds

COVER STORY


can generate double-digit, equity-like returns without simply tracking the market. This is especially valuable in a record-high stock environment.

What if rates rise, you ask? Won’t levered funds of funds have to pay more for their capital? Perhaps, but the very arbitrage strategies these funds focus on tend to become more profitable with higher rates because their profit margins, called “spreads” on the trading floor, typically increase as rates rise.

Do all levered funds of funds earn their keep? In a word, no. As with other strategies, managers matter, portfolio construction matters, due diligence matters, structure matters. In evaluating a levered fund of funds, inquire about all of these.

What is the manager’s pedigree? Does the manager favor certain strategies over others? What is the turnover in the portfolio? A levered fund of funds manager is an end user of hedge funds. Just as a hedge fund manager buys, sells, and levers individual securities, funds of funds managers buy, sell, and lever individual hedge funds. Find out why, how, and when they do so. And find out how much leverage the manager uses.

The luxury leverage affords is that the manager does not need to chase the returns of the underlying funds. Indeed, the highest-performing hedge funds are often also the most concentrated, illiquid, or levered themselves.

Levered managers can—or, at least, should—focus on the stability of the underlying funds they choose because they will lever their diverse and dependable managers to maximize returns. So understand what sorts of funds your levered manager is picking. For example, a levered

manager selecting a handful of volatile commodity funds may look great one moment and suffer a large loss the next.

A more prudent levered manager will seek to offset the risk of his or her own leverage by selecting lower volatility underlying strategies. After all, risk management is one of the key elements such funds of funds offer.

Is a levered fund of funds for everyone? Not necessarily, and not for all one’s assets either. But in a tip-toppy stock market and rising-rate bond environment, levered funds of funds offer some of the best risk-adjusted returns available.

As long-term investors will point out, the power of compounding safe returns is one of the most powerful forces

in investing. With today’s challenging environment, considering a levered fund of funds is something every sophisticated investor should do.

Abraham Biderman and Howard Horowitz serve as the senior officers of Grand Central Capital Management which provides levered funds of funds products. They can be reached at [email protected] or at 212.867.6200.

"...in a tip-toppy stock market and rising-rate

bond environment, levered funds of funds

offer some of the best risk-adjusted

returns available."

M A R C H 2 0 1 5 21


There are several variables which the estate planner must take into consideration

in designing a plan which meets the client’s objectives. Obtaining accurate and current financial information from the client, prioritizing the various goals of a client and providing access to liquidity and the appropriate amount

of cash flow at all times is a multi-dimensional and dynamic structure to build. There are however certain axioms in life which no client can avoid, and which estate planning is built upon: death and taxes. Ironically, as “certain” as these two events may be, the laws and legislature surrounding these two events are far from being certain or defined.

This article will serve several purposes by venturing into the “uncertain” terrain of estate and tax planning, which a New York taxpayer should be aware of. The reader will first be given a brief historical perspective on the development of the New York State and Federal estate tax laws, as well as an understanding of the interplay between the two regimes over the past century. A synopsis of the

current estate tax laws will be laid out to help us delineate the landscape within which the taxpayer presently stands. An analysis of the conflicts and concerns will be presented in order for the reader to gain a deeper understanding into the complexity underlying the current laws and how this affects one’s estate and tax planning. Finally, various insights and alternative approaches are offered to the reader to help alert those who may need to take steps so they do not fall into the avoidable pitfalls or make certain choices which did not need to be made until now.

In order to properly give this topic the proper attention it deserves and to effectively provide the reader with new insights, a clearer understanding, as well as, a practical and beneficial perspective, this article will be broken into two parts and published in multiple issues. This first installment will provide a historical and economic context within which to relate to the New York State Executive Budget (“NYSEB”), as a reaction to the Economic Growth Tax Relief and Recovery Act (“EGTRRA”). The second installment will assess the new regime and provide an in depth analysis into how it works and in which ways clients and advisors must plan in consideration of it.

The “Uncertain” Terrain of Estate and Tax Planning

BY Adam Katz

Katz Law Firm, PLLC

M A R C H 2 0 1 5 23

A HISTORICAL AND ECONOMIC BACKGROUND TO THE NEW YORK ESTATE TAX REGIME

Since January of 2014, the New York estate planning world has been abuzz with the implications and effects of the proposed changes Governor Andrew M. Cuomo announced would take place in just a few months’ time with the NYSEB. The Governor had expressed that the intent behind the legislative changes was to deter New York residents from moving out of state towards the end of their lives by implementing more estate tax incentives. Paradoxical as it may seem, the legislature which was passed on April 1, 2014, just a few months later did not include all of the proposed changes, has little effect on some New York taxpayers, and what is worse, actually increased the estate and income tax liability for others.

As a backdrop to provide the context within which the most recent changes to the NYSEB are taking place, there are effectively three different eras to be mindful of. The first of these eras is the pre-EGTRRA era prior to 2001. The second era is the EGTRRA years, from 2001 to 2011, as the provisions of which were intended to sunset in 2011. The third and final era is the post-2011 years when many of the EGTRRA provisions were permanently adopted rather than “sunsetting” as planned. In addition, there are various phase-out periods which are very pertinent as well as the 1997 Taxpayer Relief Act (“TRA”), signed into law by President Bill Clinton. These will be discussed as well but the macro eras require the most attention.

Below is a chart which summarizes the Federal and State estate tax rates and exemptions during the three main eras which lead up to NYSEB.

NYSEB: A SECONDARY REACTION OR COMPRISE TO EGGTRA

To a large extent, the changes occurring during these three eras were reactions to EGTRRA. However, it would be more accurate to say that classify these changes as a secondary reaction; a “compromise,” after the realizing the implications and ramifications of New York’s initial reaction to EGGTRA, as it related to the New York taxpayer. This can be demonstrated by tracking the courses that New York State and Federal lawmakers have chartered over recent years to illustrate where these two courses have aligned and where they have deviated from each other. From an understanding of how and why New York initially digressed from the Federal law, we will see that though New York is purporting to have plotted a route back to the Federal gift and estate tax regime, in reality it might just be another ruse.

HISTORICAL BACKGROUND – HOW DID WE GET HERE?

1. Pre-EGGTRA Era

Before the 1997 Taxpayer Relief Act (“TRA”) every state had an estate tax that was calculated by referencing the Federal government’s maximum state death tax credit. Under this arrangement, for every dollar of state estate tax a person paid, he or she would receive a dollar-for-dollar credit against his or her federal estate tax. Without this arrangement, the taxpayer would owe the same amount of estate tax, except that it would be paid entirely to the federal government. Thus, this new arrangement “picked up” and redirected the amount of the state death tax credit from the federal government’s revenue, rather than it coming directly from the taxpayer. Seen from this perspective, one might wonder why the federal government would

Federal Estate Tax New York State Estate Tax

Rate Exemption Rate ExemptionPre-EGTRRA 55% 600,000 16%* $600,000*EGTRRA

(2001 – 2011)

2001-

2009

Decreased to 45% by 2009

Increased to $1M in 2001 to 3.5M by 2009

16% $1M

2010 No Estate Tax

No Estate Tax 16% $1M

2011 55% $600,000 by design

16% $1M

Post-EGTRRA

(Prior to 4/1/2014)

55% Increased to current $5.34M

16% $1M

* This is based on the maximum federal tax credit for state estate tax


permit the states to redirect a portion from their revenues. Based upon constitutional law, the state death tax credit can be reframed as more of an agreed upon “commission” of sorts, whereby the state governments were actually granting permission to the federal government to levy an estate tax on residents living within the state.

2. Transitioning to EGGTRA

By the time EGTRRA came around (four years after TRA) all states were still accounted for except for New York and five others who were already starting to drift away from the federal scheme. This decoupling was in anticipation of the federal exemption increasing from $600,000 to $1,000,000 by 2006. As its name implies, EGTRRA was intended to spur economic growth by lowering the estate tax rate and increasing the estate tax exemption.1 These measures were purported to be a tax cut. As with all tax cuts, from where would the lost revenues be found? Farewell to the state death tax credit; the third salient provision of EGTRRA fully phased-out this credit by 2005.2 While a deduction for state estate taxes paid was instituted in lieu of the state death tax credit, this meant that by 2005, the Federal government would no longer be sharing the estate tax revenues with the state governments. In other words, the tax cut shifted the burden to the states to make up for the lost revenues from the states’ share of estate tax revenue. To illustrate, a three million dollar estate in 2003 would pay $145,250 less than a pre-EGTRRA estate of the same size in estate taxes. In other words, the federal government’s “tax cut” meant that it would collect 6.1%

1) It gradually lowered the top marginal estate tax rates from 55% in 2001 to 45% in 2009 and it increased the taxpayer’s lifetime exemption from $1,000,000 in 2001 to $3,500,000 in 2009 (see the chart above).

2) EGGTRA provided for an accelerated phase out of the state death tax credit over a period of four years (25% reduction per year) beginning in 2001, to being completely eliminated for deaths occurring in 2005 and after.

less in 2003, while a pickup state would collect a full 50% less than it would have in 2001 from the same size estate.

3. EGGTRA & Decoupling

In response to this revelation, the remaining coupled states were left with three choices. Some remained pick-up states in that they kept their estate taxes linked to the federal governments. Though they remained pick-up

states, by the end of 2004 there was effectively nothing left to “pick up” and they have essentially lost a revenue stream. Others partially decoupled by retaining the rates that existed prior to EGTRRA, but raising their exemption amounts in-line with the federal government’s changes. New York, among other states, chose to react differently; this particular reaction was to

fully decouple by affixing their estate tax scheme to the laws as they existed on July 22, 1998, prior to EGTRRA. In effect, this reaction entailed retaining the estate tax exemptions that are lower than the federal exemption, as well as, retaining the higher estate tax rates. The states in this last category, by fully decoupling have retained their revenue stream. In other words, rather than taking the hit themselves, the fully decoupled states, including

New York, have parried the burden, shirked by the federal government, onto

the individual taxpayer’s estates. In fact, some consider this to be an entirely new tax.

4. Post-EGGTRA Era

This “new tax” exists in New York until today. It has forced estate planners to develop complex plans that consider the tax schemes of dual governing bodies by melding together various mechanisms such as Credit shelter trusts, marital trusts, and QTIP trusts. It has been tolerated in New York for years but its tolerance was due to the fact that EGTRRA was designed to sunset in 2011. But alas the main features of EGTRRA have been permanently adopted, which meant that without a state response, the new tax would also be permanent.

"This “new tax” exists in

New York until today. It

has forced estate planners

to develop complex

plans that consider the

tax schemes of dual

governing bodies by

melding together various

mechanisms"

M A R C H 2 0 1 5 25

After the passing of the new Budget on March 31, 2014, the New York State exemption increases from the $1 million amount, as follows:

New York planners (and clients) have to pay attention to EGTRRA and the newest Executive Budget because without proper planning, it is possible that at a certain point, every dollar a New York resident earns will cost more money than the value brought in. In other words, instead of two steps forward and one step back, which is bad enough, a person may end up in a scenario where one step forward leaves one two steps back.

DECOUPLING TO RECOUPLING?From a narrow perspective, the NYSEB appears as if

there is a recoupling of the two regimes though notably at a significantly higher exemption amount than pre-EGTRRA. However, if anyone was optimistic about the New York increase of the exemption amount, their excitement surely dissipated when they calculated the ramifications of the new law in its entirety. The new Budget contains several provisions that protect New York State revenues despite the increased exemption amount. Among the most notable (and now infamous) elements that will be discussed in this article are the so-called estate tax “cliff”, its phase-out of the exemption structure, and state portability (or lack thereof ). In order to comprehend what it means for New York to have made these decisions however, a brief synopsis of the context within which this is all happening will not only be helpful, but will heighten both our appreciation and concern for what lies ahead of us.

THE RESPONSE OF NEW YORK STATE LEGISLATURE

As mentioned earlier, the NYSEB seems to be a compromise, a secondary reaction to the New York taxpayer’s realization of being levied a new tax. Also

mentioned earlier was how the main elements of the new budget - the increased exemption amount, its phase-out, and the decisions surrounding state portability- were purported to be a recoupling, a realignment of the charted courses, a return to pre-EGTRRA days, but that they were possibly just another ploy.

In the second installment we will see just how New York State is able to “afford” this exemption increase. By way of preview, it would seem that there are two traditions at play in this new legislation. The first is burden shifting, its third cameo in this article. And the other tradition, a bit more classic, is when all else fails, shift the taxes towards those with deeper pockets.

Though we tend to think of society as comprised of a trio of classes - the proletariat, the middle class, and the rich - in reality there are more nuanced subdivisions of these classes. Since New York State’s deviation from the Federal scheme, there has been much planning required for the “moderately wealthy”; those whose estates exceed the New York State exemption but are still within the protection of the Federal exemption. These estates, even if they are only marginally over the state exemption, are sharing in the burden of this new tax. The new legislation, rather than eradicating the tax, has created a very crafty way to protect this particular middle class- by pushing the uber wealthy over a cliff.

Adam Katz, JD, LLM, is the founding and managing attorney of Katz Law Firm, PLLC, a boutique firm specializing in trusts and estates, whose clients range from high-net worth individuals, busi-nesses and estates. Adam’s unique background in finance, law and tax enables him to design comprehensive and sophisticated estate plans as well as administer trusts and estates visavi post-mortem planning. Adam has published articles, taught classes and spoken in variety of forums. Special thanks is extended to Kenneth Renov, a JD candidate and paralegal at the firm, for his assistance in the preparation of this article.


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In a world full of complexity, each person is obligated to comply with constantly changing tax laws which affect not just our financial health, but our personal lives. Let us organize a life plan for you by utilizing sophisticated

estate and tax planning techniques to simplify your lifestyle and bring you peace of mind.

Designing the optimal plan based on your financial needs

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M A R C H 2 0 1 5 27

The phone rings, the licensed MLO (mortgage loan originator) takes the call and someone on the line begins by asking something along these lines,

My friend just got a mortgage for 2.56% can I?

Do you mind if I ask you what the rate is today, ok so can you lock it for me now?

My house isn’t going to be ready for a while can I get today’s rate?

I’m going for a first time homebuyer with a co-signer can you do those?

Inevitably the petitioner is looking for something

beneficial and hoping one phone call wraps up the ultimate amazing for them.

Fact is one of the most irritating questions to the MLO from an uneducated consumer are rate related. Obviously it is a different story when the client is seasoned and you already have an established relationship with their relevant information.

My purpose in this article is to bring some perspective to the process and help a searching consumer choose wisely, manage expectations and know what helps the deal work well.

RIGHT WAYRATE WAYvs.

TIPS TO OBTAINING MORTGAGE FINANCINGNICK LEIMAN & ISAAC GLUCK


A buyer will need to use services from multiple industries while transitioning into becoming an owner, no doubt a competent team is needed to help throughout. Think about it - to list a few sectors you will likely interact with: realtor, builder, attorney, insurance agent, inspector, appraiser, title company, surveyor, architect, subcontractors. The buyer is the one who must assemble their team and work with them throughout. Cooperation between parties is needed, and the better the people working for you work together, the more seamless the project will be.

We believe that a seamless transaction is the best kind of experience a client should have and we strive and aim to deliver exactly that, after all our client wants to continue their life uninterrupted and that’s why they are entrusting the task to a professional.

The process begins by qualifying the borrower for a loan, components are the same in each deal but the details vary. Slight variations will often result in major differences making one deal very different from another. Income, credit, assets, liabilities, ability to prove show and support statements made are integral to every deal. Dollar amount or percentage of down payment, size of loan- is it jumbo or is it particularly small, unit size- is it a single family or multi-unit, building type -is it a condo, co-op or free standing, usage type- is it owner occupied, investment, or perhaps a second home, what is the Loan to value being borrowed, the higher the LTV (loan to value) the greater the chance of running into Mortgage insurance becomes, all these play a role in what the rate will be. Why does this matter and how does it actually affect rate? The answer is simple the risk is determined by the GSE (government sponsored enterprises) which are the buyers of the originated loans, they in turn put in pricing adjusters to deflect the risk.

Speaking to the consumer directly is important. A personal face to face meeting is invaluable as so much can be discussed in a short amount of time. Figures and facts

can be learned and shared, strategy developed and planned. How much they should put down, what price range they should be looking for, how much they can afford. How to deal with various liabilities like student loans, car loans, new jobs, establishing credit or correcting credit issues like judgments, collections, such as Sprint, Verizon and medical matters.In short it allows for proper planning and focused looking. When it’s done on the fly a quick call by a borrower shopping around then having some discussion with a neighbor, friend or family member that knows it

all, chances are an important aspect can be overlooked. It is a large undertaking and should be done properly.

The key ingredient in any risk and reward business is trust; this means to say the broker doesn’t get paid until and unless the deal closes. It is a huge investment of time, money, and resources on the part of the broker to get involved and make it happen, something they would be unwilling to waste time on unless they felt it has a strong chance of success.

This distinction is one of the many differences between utilizing a broker service vs say a brand name bank. They don’t nurse loans and hand hold as the broker does.

Hence when the broker accepts a file, works it, communicates with the client and instructs them on details, it is for one reason only- so the deal can close without a hitch.

Think about it this way, customer arrives without a clue and broker sorts it out, sets it on course, and is focused on one thing only, getting it closed smoothly. What is the client doing for the broker; hopefully they’ll be satisfied and refer a customer.

Now imagine a client constantly calling the broker saying “what’s the rate”, the competition says they can do such and such why can’t you, I’m going to go there. They are doing themselves a disservice as they are sucking the oxygen out of the deal.

Generally speaking the rates offered in the local market are competitive and in the zone. Most any broker will be

"Take the time to understand the

process, schedule an appointment, bring your list of questions, and see who you feel understands

your situation best."

M A R C H 2 0 1 5 29

behind the Underwriters,

behind the Banks,

behind the Papers,

there are People.

732.987.6477leimanmortgage.com

It’s a hand-holding guarantee.

Nechemia LeimanPresident

Isaac GluckMortgage Loan Originator

LICENSED MORTGAGE BANKER NJDOBI AND NYSDFS. NMLS #17280


off from the next on avg is about an 1/8th or so. From time to time there are programs made available via other venues that aren’t available to brokers or small mortgage banks.

What will the broker need to start the file? Assuming our discussion is about a purchase not a refinance; a property will need to be identified, an attorney selected and a contract written to make sure you are protected. Some suggestions to protect your money pertain to having a mortgage contingency and how your EMD (earnest money deposit) escrow will be held and how it may/ may not be used. Of course there are multitudes of other points to be aware of. Make sure you are protected; make sure you choose a competent attorney who will be there for you.

After executed contracts are released from attorney review, the race to obtain a mortgage is on. After completing the application and the signing of disclosures you will need to supply tax returns for at least one or 2 prior years. They will be checked against IRS files via a 4506t, paystubs, complete bank statements, Trimerge credit report. Many more detailed aspects are put together to create a complete file which include an appraisal and title all of which are reviewed and must be approved by the lender.

Should the loan profile meet muster, a conditional approval will be granted. The conditions will typically require proof to support information that was submitted in the application. For instance an appraisal supporting the value of the purchase price will be needed, clear title, hazard insurance, proof of income, and similar such requirements.

Clients will often times ask why the underwriters are so stringent and detail oriented, why they can’t apply logic? Let’s keep in mind logic means something different to various people. Why do they need a paper trail and LOE or LOX (letters of explanation) for every silly detail? Granted these demands can be frustrating and annoying, so why all the bother. The answer is because the lender funding the loan is selling the loan post-closing onward in the market place. Usually these arrangements are made

prior to the funding. There is a concern of a buyback and that is why companies require that every effort be made to dot each "i" and cross each "t" so the file is flawless, thus mitigating the repercussions of a loan gone sour.

So to sum it up the broker is working for you, the client. He has one goal, to close the loan and have a happy

client. It goes without saying that the broker will get you the best rate available at the time the loan is lock ready. Pushing the broker to act sooner that when the loan is ready actually hurts the client, since lock extensions may be needed, or market shifts in a favorable direction and lower rates for cheaper payments become available. You can’t time the markets. Patience can work in your favor and haste can make waste.

The motivation to give the client a high rate is nonexistent since the broker or banker today sets an agreed to price prior to beginning work as to how much they will be collecting for services about to be provided,

kind of a contract price for services rendered. There is no incentive to steer the borrower to a higher rate.

Take the time to understand the process, get references, schedule an appointment, bring your list of questions, and see who you feel understands your situation best. Trust your choice and watch something complex seem simple.

Remember, do it the right way, not the rate way and you will end up with a great rate and a great experience.

Best of luck

Leiman Mortgage Network is licensed in NY and NJ and operates as a broker avoiding heter iska concerns, placing loans and arranging them with excellent third party providers.

Nick Leiman or Isaac Gluck can be reached at o-732-987-6477 , [email protected], [email protected]

" Think about it, to list a few sectors you will likely interact

with realtor, builder, attorney, insurance agent,

inspector, appraiser, Title Company,

surveyor, architect, subcontractors."

M A R C H 2 0 1 5 31


Nobody in their right mind would voluntarily agree to let someone douse them over the

head with a bucket of ice water. Yet the Ice Bucket Challenge took the world by storm, with thousands of people volunteering to get soaked, raising a cool $100 million+ in the process. What components went into making the campaign such a raging success?

“Do it big, or stay in bed” is the motto of David Sable, global CEO of the Young and Rubicam (Y&R) Group and that saying could easily be applied to the Ice Bucket Challenge.

BY Yitzchok Saftlas,

PresidentBottom Line

Marketing Group

Analyzing a Campaign that

Generated $100 Million

M A R C H 2 0 1 5 33

In case you were living in a cave for the last year, the Ice Bucket Challenge enlisted volunteers who agreed to have a bucket of ice water dumped on their heads to raise money for the ALS Association. ALS is a neurological disease where the brain can no longer control the body’s muscles. ALS, is also known as Lou Gehrig’s disease. Gehrig, the legendary New York Yankee first baseman known as the Iron Horse, played in 2,130 consecutive games, yet he died of ALS in 1941 at the age 37.

The origin of the Ice Bucket Challenge is not totally clear, however, the most commonly accepted version credits the idea to Peter Frates, a former collegiate baseball player from Boston, diagnosed with ALS in March 2012. It took off in mid-July of this year when Matt Lauer, host of the Today Show, became the first major celebrity to do it live and in living color.

It caught on, spreading across America, and throughout the world, with the wet-heads donating money to the ALS Association, and challenging their network of friends and colleagues to follow suit, although it’s usually advisable not to wear your finest suit when getting doused.

This totally unorthodox fundraising campaign spread like wildfire.

The actual dousing takes only a few seconds, allowing for a catchy and short clip suitable for easy and fast upload on social media. By the end of August, more than 2.4 million videos of Ice Bucket Challenges were uploaded to Facebook. Some 28 million people posted, commented, or liked these videos and it’s more than likely that a good number of those 28 million donated too.

As more and more people decided to get soaked, the ALS Association basked in success. By summers’ end, it hauled in some $113 million in donations; quadruple the sum it fundraised from all sources in 2013. The average donation was $46.25 and the single largest donation was $100,000.

There are several reasons why I think this campaign knocked the ball out of the park like Lou Gehrig did 493 times in his illustrious career.

The campaign utilized a wide range of proven marketing concepts. The timing was perfect. It reached a

peak at the beginning of the summer, when people are looking to chill. An ice bucket concept wouldn’t have worked in the winter, unless maybe you live in Miami Beach or Hawaii.

The fact that so many big-name celebrities got into the act certainly helped. Former President George W. Bush, Bill Gates, and Mark Zuckerberg were among those who took the plunge. This is an important point to remember for any organization looking to raise awareness. Relationships matter and you must leverage connections to your best advantage.

Finally, the spirit of competition made it fun. The attitude of: “If he can do it, so can I,” spread.

The Ice Bucket Challenge picked up steam, if you will, precisely because it was a unique, out-of-the-bucket concept that helped people to understand this very complicated disease and empathize with those suffering from it.

Sharing his own thoughts on his LinkedIn page at the end of August, Y&R’s David Sable noted that while using social media to raise awareness is what “click and shout” is all about, the next step is to ensure that the social part is tied to an action in the real world.

“The entertainment is proof that a good idea, and a great story, engages people. That’s marketing 101,” writes Sable. “But at the end

of the day, there is no substitute for the pure emotion that helps to motivate behavior. The real push is for dollars that can be used to cure this incredibly insidious disease.”

Bottom Line Action Step: Build a successful marketing campaign by timing it right, leveraging relationships and thinking out-of-the box.

Yitzchok Saftlas is the CEO of Bottom Line Marketing Group, a premier marketing agency recognized for its goal-oriented brand-ing, sales, and recruitment and fundraising techniques. Serving corporate, non-profit and political clientele, Bottom Line's notable clients include: Beth Medrash Govoha, Dirshu and TeachNYS. He can be reached at [email protected]

“A good idea, and a

great story, engages

people. That’s

marketing 101. But

at the end of the day,

there is no substitute

for the pure emotion

that helps to motivate

behavior.”

M A R C H 2 0 1 5 35


One must be a real optimist to start a company! How else would they get past the endless permits and

paperwork, cope with the stress and lack of sleep, and overcome the insurmountable odds in pursuit of a slice of the American

dream? If one is fortunate enough to partner with a like-minded optimist, or even two, they can share the burdens as well as the successes. However, by their very nature, optimists don’t dwell on the possibility of death or disability. Unfortunately, in reality these things do happen and their impact on a business and its remaining partners can be devastating.

Let’s start with the seemingly worse scenario – the death of a business partner. While deeply unsettling in the short run, the death of a business partner can be managed quite effectively if a buy-sell agreement is in place. The buy-sell agreement includes provisions for owners to buy out the interest of a co-owner in specific cases, such as in event of death or total disability. In the small business marketplace, these agreements often include provisions to fund a buyout with life insurance in the event of death. The inability of a partner to continue working due to serious injury or illness is quite another matter. Yet, it appears that it is less common to find provisions within buy-sell agreements that fund a buyout in the event of a disability with disability buyout insurance.

In general, a buy-sell agreement is a written legal contract that might specify what happens to the business

interest in the event that an owner dies, becomes disabled, or retires from the business. It helps the remaining owners ensure the continuation of their company and provide financial security for their family. These agreements can be structured in several different ways. A knowledgeable advisor will help to choose the right approach based on variables such as the number of owners, number of buyers, relationship between owner and buyer, tax consequences, etc. A properly written and funded buy-sell agreement should achieve the following:

• Establish a ready market to purchase a business interest

• Establish a purchase price of the business interest

• Identify the future buyer(s) – typically co-owners or key employees

• Identify the events that would trigger the buy-sell agreement

• Create a legal obligation for all parties involved

• Provide the source of funds necessary to make the buy-sell arrangement effective

While business owners will often put in place a buy-sell agreement for the event of a death, many business owners – and their advisors – don’t explore the disability exposure. This may be because they don’t know about disability buyout insurance or, if their advisors do, they often lack the confidence to bring up the subject with their clients. What they may not realize is just how important

The BuyBY

Jacob Akerman,President

Akerman Financial Inc

M A R C H 2 0 1 5 37

this insurance can be to the ongoing functioning of a business.

This tendency to ignore the disability exposure is not uncommon. According to a 2010 study from the Council for Disability Awareness (CDA), 64% of wage earners believe that they have a 2% or less chance of being disabled for 3 months or more during their working career. This outlook is quite removed from reality. In December 2013, 8.9 million disabled wage earners – over 5% of U.S. workers – were receiving Social Security Disability (SSDI) benefits, according to Social Security data reported by CDA. SSDI compensates for long-term disabilities and its benefits are subject to stringent qualifications, so the SSDI figures represent just the tip of the disability iceberg.

Let us analyze a common story:

Two partners were in business until one partner had a stroke at the relatively young age of 48 and could no longer work. The two of them did have a buy-sell agreement, but it was only funded with life insurance. Because there was no disability buyout insurance, one partner wound up buying out the other’s interest from current cash flow. The life insurance did eventually pay — but that didn’t happen until nine years later when the disabled partner died.

During that time, there was one owner performing the job of two while the business was still compensating two partners. This left the business without the funds to hire someone to replace the disabled partner. While this business managed to survive, many businesses in such situations do not. They often end in bankruptcy or lawsuits with the disabled partner’s family members.

This story highlights the need for businesses to establish buy-sell agreements with specific provisions addressing both death and disability of a partner. A properly drafted buy-sell arrangement should cover more than just the purchase and sale agreement, it should answer vital questions such as:

1. How will the value of the business be determined for the purchase and sale of the business? Determining the value of the business is a crucial part of the business succession planning process. Most business owners think they know the value of their business, but are surprised at the actual

value when all the relevant factors are analyzed.

2. How is “disability” to be defined, and who will determine eligibility?

3. How will the healthy owners pay for the purchase of the disabled owner’s interest?

4. How will the disabled owner’s share of business expenses be paid during the period of disability?

5. Will a disabled owner continue to be paid during a period of disability prior to the execution of the purchase and sale?

It’s always advisable to seek the guidance of a trusted legal advisor who understands the intricacies of structuring the operating agreement to properly accommodate the

disability buy-sell arrangement. Business owners should continue to meet with their advisors to discuss and review such agreements every few years to make any adjustments necessary as the business grows or changes.

Business owners have told me time and again that disability buyout agreements are rarely discussed. When they are considered, small-business owners tend to defer – either due to the added insurance expense or unrealistic expectations about the likelihood of becoming disabled. However, I have found that when the risks and benefits are properly explained, a good advisor will be able to effectively structure a solution that properly addresses each client’s financial security without breaking the bank.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed

by the IRS, we inform you that any U.S. tax advice contained in this message was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties under U.S. Federal tax law, or promoting, marketing or recommending to another party any transaction or matter addressed herein.

Jaocb is the President of a firm dedicated to the long term disability insurance marketplace. We specialize in navigating complicated disability insurance contracts, and finding and customizing a right match for our clients. For the past ten years we have assisted our clients ranging from large hospital and doctor groups to clients in the HVAC instillation business and all in between obtain coverage tailored to their unique needs. Jacob can be contacted directly at [email protected] or 917-318-5634.

"It’s always

advisable to seek

the guidance of a

trusted legal advisor

...to properly

accommodate the

disability buy-sell

arrangement."

The recent and far-reaching

New York State Not-for-Profit Revitalization Act (“NPRA”)

M A R C H 2 0 1 5 39

BY Ethan Kahn, CPA

and PartnerWeiser Mazars,

LLP

Governance properly administered is the bedrock of today’s not-for-profit

organization. The way in which boards serve an organization, and their commitment to excellence in good governance, plays a significant role in setting a tone of integrity and ensuring the ultimate viability of programs. The

accelerating pace of revised standards and expectations, increased regulation and oversight, and other emerging issues in the marketplace have raised the bar on delivering quality services and challenge all members of the not-for-profit community to critically review performance practices.

The not-for-profit industry has recently become a focal point for additional oversight and control by funding agencies and government entities. A primary example of these efforts is the recent and far-reaching New York State Not-for-Profit Revitalization Act (“NPRA”). These sweeping regulatory changes have shown the importance of crafting different oversight regimes based on organization type: large vs. small, complex vs. simple and well-funded vs. insufficiently funded. The lead thinkers of the sector have expressed significant concerns about a host of ambiguities contained in the statute. While the standard setters remain committed to clarifying these in the near future, not-for-profits in New York still face an era of uncertainty.

Although the ultimate goal of the regulation is to improve service for not-for-profit constituents and to ensure that funds are spent for their intended purpose, it is often the case that the board and staff do not have the bandwidth to both comply with the new regulations and to focus on quality services.

APPLYING THE LAW - COMPLIANCE VS MISSION

Although all not-for-profit organizations are held to the same level of compliance with the standards, there is no simple, cookie cutter method for each organization to comply with the law. Tailoring compliance to each organization is key to coping with the many new requirements. The challenge ahead is for not-for-profit organizations to

find the right balance between being fully compliant and providing quality services to the public. Unfortunately, smaller organizations may find the increased cost of compliance translates into compromised quality of service.

In order for an organization to adopt the standards appropriately, it is important to understand the initial intent of the government. The stated governmental goal is to preserve public confidence in the industry. Public confidence will then translate into increased and ongoing private and government funding, as they will trust their dollars are being spent prudently.

NPRA does incorporate a few thresholds that separate larger organizations from smaller ones, including audit thresholds, a whistleblower policy, and audit committee requirements. However, annual revenue of $1,000,000 is the main threshold and organizations of that size have already expressed difficulty meeting compliance.

Leaders of not-for-profits need to take a step back and determine how these new standards apply to them, as there are several notable differences in the treatment of a complex organization from a simple one, including:

• Quantity and complexity of funding streams (various Federal, State and City grants, fundraising income, sponsorships, endow- ments, etc.).

• Software used and the integration of that software to share and reconcile information (general ledger, fundraising, human resources, billing, staff hours worked, staff program allocations, internal compliance software etc.).

• Geographical location (multiple sites versus a single site, and location of the multiple sites). At times, organizations have legal responsibilities and compliance requirements in other states, without being aware that they exist, based on fundraising activities.

• Foreign affiliates, subsidiaries, and relationships with for-profit entities.

• Filing requirements such as an independent CPA’s audit report versus a review report, OMB Super Circular audit requirements which include the A-133/ OMB Super Circular audit

"The challenge

ahead is for

not-for-profit

organizations

to find the right

balance between

being fully

compliant and

providing quality

services to the

public."

missioncompliance


requirements, HUD filings, pension audits, Consolidated Fiscal Reports, etc.

Next, the complexity of the organization must be examined. Below are several practical examples showing the different application of the new laws in terms of entities of various levels of complexity:

• Conflict of interest policies became New York State law under NPRA. However, the details included must be “reasonable” for the size of the organization. Currently, James Sheehan, the Chief of the Charities Bureau for the New York State Office of the Attorney General (the “AG”) has indicated that he will not be posting a sample conflict of interest policy on their website; this is because the complexities that a large hospital would face are different than those of a small startup not-for-profit. Therefore, the detail and protection for each agency varies and must be designed to be “within reason.” An agency with a board most of whose members are related to the constituents of the non-for-profit (common at schools and universities where the board members are often parents), would create specific guidelines relating to their risky areas within the conflict of interest limitations. It would be inefficient to implement unnecessary nuances to smaller organizations whose risks of conflicts are considerably less.

• The board agenda of a large and complex organization would likely have many more components than that of a small, simple entity. In particular, the law requires the board to oversee the financial processes of the organization. Financial processes can be very lean at a small entity with one employee, a single site, one funding stream and one software system. There is less tracking of allocations, fewer kinds of software and, therefore, a mitigated need to prepare and to review reconciliations, allocations and tracking systems. It is important to note, that the board requirements should be tailored to each organization. Additionally, under normal circumstances, the board would not be involved in day to day detailed activities. Rather, it functions as a governing and oversight body.

• Required filings differ between organizations and

they are often accompanied by added processes that are necessary to allow various reports to be generated. Those extra steps would create additional oversight needs.

• An organization may have to have a full time employee as a compliance officer as opposed to an individual dedicating a percentage of their time to that function.

The above examples show how the implementation of the law would differ between entities. It is up to the leaders of each organization to design appropriate processes to maintain ongoing compliance and to gauge whether experts are needed to guide these activities in the appropriate direction.

There are multiple processes involved in adopting any new policy or procedure, including designing the policy to be suitable for the size and complexity of the organization, then implementing and monitoring that policy.

To an extent, not-for-profits find themselves in a friendly environment – the Attorney General has indicated that he will begin with a “soft touch” approach by inquiring whether organizations are compliant with the NPRA. He will be looking for full compliance or serious

efforts to become compliant in the near future. These inquiries will be made on a random and calculated basis and it is therefore incumbent upon organizations of all sizes to embrace these laws and work towards compliance with them.

THE RIPPLE EFFECT - POST NPRA HEIGHTENED EXPECTATIONS

With the issuance of Sarbanes Oxley (designed for public companies) there was an immediate ‘trickle down’ effect to exempt organizations, whereby they were expected to comply with the whistleblower and conflict of interest policies and related processes. Current events within the not-for-profit industry and the passing of NPRA have also generated a domino effect, bringing NPRA’s compliance expectation to other government agencies, oversight agencies and, at times, vendors. Government contracts are being revisited and modified to incorporate specific elements of NPRA as well as additional requirements in

M A R C H 2 0 1 5 41

line with NPRA’s intentions.

Below are some examples of the unintended ripple effects of the law:

• On a governance level, in light of the focus on conflicts of interest and related parties, companies offering Directors and Officers Insurance policies have realized that their exposure has increased based on new legal requirements of the board. The insurance companies have not yet fully reacted to this new reality – organizations should monitor developments going forward as costs are likely to go up and specifics within insurance contracts will almost certainly change.

• Similarly, banks offering loans to the sector have been considering NPRA requirements and seeking advice from their risk management teams about how the added regulations would affect approval of a loan or deem a potential client ‘high risk.’ Some institutions are contemplating adding items to their screening questionnaires such as checklists with particular, relevant components and more deliberate questions, such as; “Is the organization compliant with all laws and regulations?” where an affirmative response would be representative of many compliance processes being in place at the entity seeking the loan.

• Another governance ripple effect has been with board composition. NPRA requires a minimum of three independent board members (as needed for the Audit Committee), however, oversight agencies such as the BBB Wise Giving Alliance requires five voting members. Therefore, the minimum size of a board has increased by 2 voting members.

• Accountants follow the Generally Accepted Accounting Principles (GAAP). However, GAAP has not been a focus of oversight agencies other than their knowing it exists and making reference to it. Today, we find ourselves in an environment where the AG is aware of accounting and auditing requirements and has incorporated various components of these into the screening process for exempt organizations. Examples include AU section 316 (formerly SAS 99) for consideration of fraud, and risk assessment of an

organization prior to articulating the audit plan for field work amongst others.

THE BOARD MEMBERS PERSPECTIVEIt is normal for board members to feel apprehensive,

to act cautiously, and to feel the need for formal board training. A board member should understand that these rules are not insurmountable, but require effort and a focus on learning and complying with the new duties.

A prudent approach for board members would include:

• Do your due diligence - read the certificate of incorporation and bylaws to gain an understanding of the organization’s legal status and processes,

inquire about the transparency of management and the interactions the board has with the various members of management (program directors, finance, compliance, HR, IT, etc.). Review their form 990’s and state filings and other key documents that provide insight about their programs and size. Review the financial statements and independent audit firm communications to management, (including any comments about deficiencies noted throughout the audit.) Inquire about adequate insurance coverage and key internal

controls that would mitigate risky issues. It is also useful to review the organizational chart, become familiar with the

internal controls and processes of the organization and the integrity of the other board members and key employees.

• Make sure you understand the duty of loyalty, care and

obedience and how these three categories translate into overseeing the respective agency - there are many specifics that are embedded within these three overarching umbrellas of responsibilities.

Within each phase, documentation is the key component to proving to an auditor that the process has been fully incorporated. It is common for auditors, the IRS, or state agencies to inquire about whether a particular policy is in place, or whether a process is being followed; the staff tend to respond firmly that ‘yes we do have that process and follow the rules,’ yet upon further research there are no documents to prove the process was ever done. The rule of thumb is ‘if it is not documented it was

"The rule of

thumb is ‘if it is

not documented it

was not done.’"

not done.’ This is both the motto of and effective approach for auditors and oversight agencies.

MOVING FORWARDJuggling regulatory changes while maintaining quality

services can be a challenging endeavor, especially in an environment of “doing more with less.” From a standards perspective, great leaps have been taken by standard setters, regulators and users of reports to improve the level of transparency and reliability of the elements comprising audits and filings. These changes may have initially appeared detrimental, yet upon incorporating them into our practices, it is clear that, despite the growing pains, these new standards have been beneficial for the industry as a whole.

Not-for-profit organizations strive to operate with speed without sacrificing quality, to be efficient and effective. Organizations have embraced these changes and, perhaps to a degree, rebounded from the attack on their integrity. Sector leaders should carefully consider the nuances of the laws, contractual agreements and other relative guidelines to craft a well-planned strategy that will ensure the long term viability of their individual programs.

Ethan has more than 16 years of experience delivering audit, accounting and consulting services to a range of clients, partic-ularly in the not-for-profit sector. He provides clear and sound advice to senior management and Boards of Directors.

Ethan is an expert in helping clients overcome strategic planning challenges, as well as performing internal audits, ensuring compli-ance, assisting with mergers and acquisitions, reviewing internal control structures and preparing audit packages for the annual audit. He has a successful track record of helping clients achieve their goals. Ethan has completed financial statement audits and tax fil-ings for organizations ranging from income of $50,000 to $200,000,000—including those requiring audits pursuant to OMB Circular A-133. He also has extensive experience in gov-ernment funding and cost reports including in SED funding, CFR preparation and reporting and its respective rate setting methodology.Other services include: assessing grant reimbursements, trend anal-ysis, agency-wide budgeting, assisting with government audits, efficiency analyses, trainings (fiscal, program and board), building business models, quality control, oversight of finance departments and outsourced CFO. Ethan’s effective and timely approach has earned many trusted and loyal client relationships, and his audit recommendations have sig-nificantly improved his clients’ operations. Prior to joining WeiserMazars, Ethan led his own accounting and advisory practice. He has also worked at large regional firms servic-ing the not-for-profit industry. Ethan received his B.S. in Accounting from Touro College. He is a Certified Public Accountant in the State of New York. CONTACT: WeiserMazars LLP Ethan Kahn | Partner135 West 50th Street New York, NY 10020 (P) 212.375.6794(Email) [email protected]

M A R C H 2 0 1 5 43

PLEASE CONTACT:

Ethan Kahn / Partner646.402.5799 / [email protected]

TOUGH ENVIRONMENTS CAN LEAD TOAMAZING GROWTH

EXTREME CONDITIONS HAVE ALLOWED SELENITE CRYSTALS TO BECOME AS MUCH AS 40 FEET IN LENGTH, WEIGHING 55 TONS.

WWeiserMazars creates conditions that are exactly

right. We deliver the expertise, hands-on service and

global resources that help your company grow even

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BUSINESS DIRECTORYARCHITECTUREJacob Goldman DesignConsulting & Project Management69 Taaffe PlaceBrooklyn, NY [email protected]

AUTO LEASEAnchor Auto Lease319 River Ave.Lakewood, NJ 08701T: 732-363-8989

COMMUNICATIONSJive TelT: 718-924-2300www.jivetel.com

TelebroadT: [email protected]

DESIGN & MEDIAAjax Union2233 Nostrand AveBrooklyn, NY 11210(855) 631-1268www.ajaxunion.com

BP Graphics315 Fourth StreetLakewood, NJ 08701T: [email protected]

BrandRight Marketing Group113 Hillside Blvd.Lakewood, NJ 08701T: 732-372-0404F: [email protected]

DMJ Digital MediaDavid JasseGreat Video. Stunning ResultsT: 516-300-1500, 212-874-5073C: [email protected]

Echod Graphics433 Park AvenueBrooklyn, NY 11205(718) 643-1454www.echodgraphics.com

Promoline1www.promoline1.comT: 718-640-1640Ptex Group3823 13th Ave.Brooklyn, NY 11218www.ptexgroup.com

FINANCIAL SERVICESAccurate Pay Inc.T: [email protected]

Akerman Financial [email protected] 3185634

Akiva Spitzer, CPA74 Herrick Ave, Suite 202Spring Valley, NY 10977T: 845-356-0063F: [email protected]

Bernath & RosenbergWealth Management1430 Broadway, 7th FloorNew York, N.Y. 10018Phone: 212-221-1140Fax: 212-221-1944

Broad Financial1-800-395-5200www.broadfinancial.com

Fidelity Payment Serviceswww.Fidelitypayment.com

First Choice Merchants2 Skillman StreetBrooklyn, NY 11205(718) 422-0909www.firstchoicemerchants.com

Federal Savings Bank Steve Neiman401 Madison AvenueLakewood, NJ 08701T: 732-965-2226C: 732-213-4461sneiman@thefederalsavingsbank.comwww.thefederalsavingsbank.com/

steveneiman

Fusion Family Wealth88 Froehlich Farm BoulevardSuite 401Woodbury, NY 11797516 206-1320www.fusionfamilywealth.com

Leah Kliger, CPAKliger and Company, Inc.Certified Public Accountants6 Chelsea CourtLakewood, NJ 08701T: 732-370-5300F: 732-370-5325

Livian & Co.136 East 57th St., Suite 501New York, NY 10022T: 212-319-8900www.livianco.com

MegaPay usaA Payroll processing companyP: 845674920021 Robert pitMonsey NY [email protected]

M A R C H 2 0 1 5 45

McGladrey1185 Avenue of the AmericasNew York, NY 10036T: 212-372-1000www.McGladrey.comMoshe F. Teitelbaum, CPA 134 Broadway Suite 407Brooklyn, NY 11249T: 718-388-7168F: 718-732-0226

PC Payroll, Inc.1170 Routte 17M Suite 5Chester, NY 10918Tel. 845.363.8100Fax. 845.363.8101www.pcpayroll.com PL Consulting3715-T Clarks LnBaltimore,MD [email protected]

Robert FormisanoFinancial AdvisorMorgan Stanley Wealth Management1200 Lenox Drive | Suite 300Lawrenceville, NJ 08648(609) [email protected]

Roth & CompanyT: [email protected]

Saul N. Freedman & CompanyBrooklyn, NY 6201 15th Ave.T: 718-232-1111

Lakewood, NJ 100 Route 70T: 732-719-5284

Maplewood, NJ 515 Valley St.T: 973-763-3300

Rockland County, NYWillow Tree Rd.T: 845-354-9568

Weiser Mazars LLP135 West 50th StreetNew York, NY 10020212- 812-7000www.weisermazars.com

Smart Pay Payroll216 River AvenueLakewood, NJ 08701T: [email protected]

HEALTHCAREDr. Boruch Lifshitz, Family Dentist2 Executive Blvd., Suite 100Suffern, NY 10901T: 845-368-0400

Medical Supply Depot1702 47th St. Brooklyn, NY 11204T: 1-888-874-3831 [email protected]/SBJ

HUMAN RESOURCESPlatinum HR Management4512 Farragut RoadBrooklyn, NY 11203 Tel: 718-859-1600

INSURANCEB Insured Agency25 Robert Pitt Drive #220Monsey, NY 10952(845) 578-9800www.biains.comEFG AssociatesSol Edelstein, President1315 Ave J, 2nd FloorBrooklyn, NY 11230T: 646-580-6115F: 212-208-3040www.SolEdelstein.com

GFI Insurance Brokerage, Inc.New York, NY140 Broadway, 41st FloorNew York, NY 10005Monticello, NY30 North St.T: 212-837-4575www.gfiinsurance.com

LIA Insurance Agency, Inc.Commercial. Home. Life. Health.328 Third St.Lakewood, NJ 08701T: 732-905-4100Toll Free: 855-500-4LIA(4542)F: 855-855-7813info@LIAInsuranceAgency.comwww.LIAInsuranceAgency.com

Retek Benefit Solutions, Inc.1270 47th StreetBrooklyn, New York 11219Phone:718-438-8209Fax: 718-853-5330Toll Free: [email protected]

LAWBarmak & AssociatesT: 609-454-535129 Emmons Dr.Princeton, NJ 08540www.barmak.com

David C. Steinmetz, Esq.Kunstlinger Steinmetz, LLP212 Second Street, Suite 304Lakewood, New Jersey 08701Phone: (732) 367-1880Fax: (732) 961-3979

Katz Law Firm, PLLC77 Spruce Street, Suite 201Cedarhurst, NY 11516(516) 279-2791www.katz-law-firm.com


BUSINESS DIRECTORY (cont.)

LAW (cont.)Marvin L. Schwartz, Esq.Schwartz Burton LLP500 River Avenue, Suite 215Lakewood, NJ 08701T: 732-806-8181F: [email protected]

Pomper & Associates611 South Park Ave.Highland Parkwww.pomperandassociates.com

Schulman Law FirmElie Schulman, Esq190 Willis Avenue Mineola, NY 11501T: 516-739-1020

The Rothenberg Law FirmNew York Office450 7th Ave44th FloorNew York, NY 10123888.651.3099www.injurylawyer.com

Trebuchet Outsourcing Services212-461-1745 [email protected]://www.trebout.com

Weissman Law FirmHome of Loan Modification & Debt Consolidation335 Central Ave.Lawrence, NY 11559T: 516-300-1616F: 516-374-7059

LENDING SERVICESEastern Union - NY3839 Flatlands Ave #211Brooklyn, NY 11234 t. 718-567-8400 [email protected]

Eastern Union - NJ481 Oak Glen RoadHowell, NJ 07731t. [email protected]

Empire Lending StrategiesT: 845-406-4433First MeridianT: [email protected]

Funding Resources Mortgage Corporation777 Passaic Avenue, Suite 535Clifton, NJ 07012T: 973-249-7878Toll Free: 888-FRM-FRMCF: 973-777-9111www.fundingrmc.com

Leiman Mortgage732.987.6477leimanmortgage.com

Mid Island Mortgage Ben Werczberger BrooklynT: 718-496-2607

MARKETINGProfound Marketing Agency1072 Madison Avenue, Suite D5]732-930-5871

OFFICE SUPPLIESThe Office Desk LtdT: 845-371-4657F: [email protected]

PROPERTY MANAGEMENTMSL Property ManagementT: [email protected]

Ramapo Management259 Route 59, Suite 3Spring Valley, NY 10977T: 845-352-4348F: [email protected]

REAL ESTATEBenedict Realty Group, LLC150 Great Neck Road, Suite 402Great Neck, NY 11021T: 516-498-9100F: 516-498-9105www.brgny.com

Blue Sky Realty GroupMoshe GottfriedLicensed RE Broker20 Robert Pitt DriveMonsey, NY 10952T: 845-371-8471F: 845-371-8473

Riverside Abstract LLC 3839 Flatlands Avenue, Suite 208 Brooklyn, NY 11234 T: 718-252-4200 F: 718-252-4226 C: 917-543-2352 [email protected] [email protected]

STATE FILING SERVICESVcorp Services25 Robert Pitt Drive #204,Monsey, NY 10952(845) 425-0077www.vcorpservices.com

TECHNOLOGY SERVICESSM Tech Solutions212.203.2390info@smtechsolutions.comwww.smtechsolutions.com

M A R C H 2 0 1 5 47


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New Investment OpportunityWell established business servicing high end clients in the Tri-State are looking for investment capital to expand the business. Owner is offering 30% equity in the company.

Marble & Granite CompanyWell established Marble & Granite business for sale in NJ. Strong growth with many contracts. The buyer will have the ability to receive all the existing contracts and connections the business has accumulated over the years as well as learn the nature of the business from the owner himself. Multiple buy out options available. Very well priced and room for strong growth.

Legal Document Scanning CompanyWell maintained and growing business for sale located in New York. This company is a service provider to Medical facilities as well as Accounting firms Law firm with contracts throughout the United States. Smaller in size, between 8-10 employees and well-priced.

FT CONTROLLERWell established private company in Manhattan looking to hire a well experienced controller. Must have 2-4 years’ experience, excellent communication and organization skills. Will be dealing with multiple entities as well as

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FT OFFICE POSITIONWell established company located in Lakewood NJ looking to fill an immediate opening in their firm. The desired candidate will have 2-4 years office experience, be able to work well within a team and be able to communicate effectively. Previous office experience a must. Quick Books experience huge plus. Excellent and professional environment.

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